The global financial crisis is coming, now warns IMF as it shares the global debt is skyrocketing and economies getting affected. It also talks rapid development of financial technologies that poses challenges to financial system. With the situation worse than at the time of 2008 crisis, will bitcoin and crypto play a role when “second Great Depression” hits the world?
World Debt Skyrocketing, Financial Crisis affecting Growth
Financial experts have already come out and spelled the upcoming Financial crisis in 2020. Now, the International Monetary Fund (IMF) is warning about another financial meltdown. The causes for concern raised by IMF include a dramatic rise in lending and failure to impose tough restrictions on asset managers handling trillion dollar funds and insurance companies.
The global debt levels have reached well above the time of 2008 crash. Christine Lagarde, IMF head shares that the total global debt has surged 60% in both private and public sectors reaching the all-time high at $182 trillion which is another concerning point.
“The sequence of aftershocks and policy responses that followed the Lehman bankruptcy has led to a world economy in which the median general government debt-GDP ratio stands at 52%, up from 36% before the crisis; central bank balance sheets, particularly in advanced economies, are several multiples of the size they were before the crisis; and emerging market and developing economies now account for 60% of global GDP in purchasing-power-parity terms – which compares with 44% in the decade before the crisis – reflecting, in part, a weak recovery in advanced economies.”
Furthermore, this is all making the governments and companies of developing worlds more vulnerable to destabilization which according to Lagarde “should serve as a wake-up call.”
The annual economic outlook of IMF in a separate analysis warns of the “large challenges” that loom over economies to prevent the “second Great Depression”.
Bitcoin & Crypto Could Play a Role
IMF also talks about the rapid development of digital currencies like Bitcoin along with digital trading platforms as in IMF’s Chapter 2 of the Global Financial Stability Report – Regulatory Reform 10 Years after the Global Financial Crisis: Looking Back, Looking Forward, it shares,
“Despite its potential benefits, our knowledge of its potential risks and how they might play out is still developing. Increased cybersecurity risks pose challenges for financial institutions, financial infrastructure, and supervisors. These developments should act as a reminder that the financial system is permanently evolving, and regulators and supervisors must remain vigilant to this evolution and ready to act if needed.”
The upcoming financial crisis is coming according to experts and this is putting up the questions if Bitcoin will become the safe haven among the crypto enthusiasts.
Do you think Bitcoin or crypto will play an integral part when financial crash hit the global economy full force?