Weiss Ratings founder published a paper on the upcoming changes in the US banking’s Volcker Rule that will drive the investors to the cryptocurrencies as banks become a far more riskier venture.
Volcker rule changes: More power to banks to exploit deposited funds
Martin D. Weiss of Weiss Ratings along with Juan M. Villaverde has published a blog about the change in the Volcker Rule. This rule basically limits the ability of banks to gamble with the deposited funds of the public.
With the new changes, “the Federal Reserve and other U.S. banking regulators are getting ready to water down the Volcker Rule”. According to him, it has come at a time, “when risk-taking has reached a peak and key risk assets threaten to cause severe losses.”
In January, Weiss Ratings published the first cryptocurrency ratings, awarding Ethreuma B while Bitcoin a C. Now, Weiss’ focus is on Volcker policy.
In the dedicated blog post, he talks about this green light to trade the risky assets being similar to the ones that helped cause the 2008 debt crises.
“according to the JPMorgan Chase index, the debt of American companies just posted one of their worst 100-day returns since 2000. And Fitch Ratings says massive global debt levels have made emerging markets especially vulnerable as U.S. interest rates move higher.”
Both the authors gave the examples of Argentina and Iran’s economy that are suffering from massive losses in their life savings as their local currencies took a plunge.
Issues with banks, cryptos to become the game-changer
Talking about the fundamental weaknesses in the global financial system, he points out: there is over-reliance on megabanks, rich rewards for excessive risk-taking that created a speculative bubble in the mid-2000s, and highly leveraged and risky derivatives.
The post then moves on to explain how the majority of the public is still in the dark. They use banks because it’s “a convenient place for their money”.
“In most developed nations, this failure comes into question only during extreme crises — like during the thousands of bank and S&L failures of the 1980s or the megabank failures of 2008.”
Focusing on crypto being the better version, the post states:
“Cryptocurrencies do such a fundamentally better job as a safe depository, it’s difficult to envision a world in which this technology does not become a game-changer for money and banking.”
The post mentioned that “too much volatility” and “lack of information” are the main reason why the majority still has to shift to cryptos.
The public expresses extreme interest as soon as they learn the difference. Higher-than-average interest and adoption have already started in countries like Argentina, Zimbabwe, Iran, and Venezuela.
The post is concluded with
“Now that we have better technology for safe storage of savings, credit markets will have to reinvent themselves. The future financial system is likely to be very different from what we take for granted today.”
Do you think with the change in Volcker rule, we’ll be seeing a major shift towards cryptocurrencies? Share your thoughts with us!