Russia-Ukraine War May Accelerate Digital Currencies – BlackRock’s Fink – Cryptovibes.com – Daily Cryptocurrency and FX News
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Larry Fink, BlackRock Inc’s (BLK.N) chief executive, said on March 24 that the Russian-Ukraine war may end up accelerating digital currencies as a tool to settle most of the international transactions. Notably, this conflict that has now lasted for over a month upends the globalization drive of the latest 30 years.
In a letter sent to the shareholders of the world’s biggest asset manager, Fink insisted that the war will push nations to reassess currency dependencies. He said that BlackRock was studying digital currencies and stablecoins as a result of increased interest from its clients.
He stated:
“A global digital payment system, thoughtfully designed, can enhance the settlement of international transactions while reducing the risk of money laundering and corruption.”
This statement seemed to strike a different tone from May 2021, when Fink raised some issues about volatility and stated that it was still quite early to determine whether cryptos were just a speculative trading tool.
In a March 24 letter, the chairman and CEO of the $10 trillion asset manager insisted that the Russia-Ukraine crisis managed to put an end to the globalization forces at work in the last three decades. He said that access to global capital markets was a “privilege, not a right.” He also added that BlackRock had suspended the acquisition of all Russian securities in its active index portfolios after Moscow invaded Ukraine.
“Over the past few weeks, I’ve spoken to countless stakeholders, including our clients and employees, who are all looking to understand what could be done to prevent capital from being deployed to Russia. We believe this is the definition of our fiduciary duty.”
Interestingly, BlackRock Inc’s total client exposure to Russia had dropped to below $1 billion earlier this month from $18 billion before Russia’s invasion of Ukraine resulted in Western sanctions and the closure of the Russian stock market, based on figures supplied by the asset manager this month.
Russia still insists that its actions in Ukraine a “special operation.”
The war’s effect on the global supply chains, already beaten over the last two years due to the COVID-19 pandemic, is expected to contribute to lots of inflationary pressures that are now compelling global central banks to tighten their monetary policies and reverse the pandemic-driven accommodative measures. Fink stated:
“While companies’ and consumers’ balance sheets are strong today, giving them more of a cushion to weather these difficulties, a large-scale reorientation of supply chains will inherently be inflationary.”
He insisted that the central banks are now dealing with a dilemma they had never encountered in decades, having to choose between slowing economic activities to contain the price pressures and living with high inflation.
Energy prices have spiked as sanctions on Russia prompted by firms and nations to reassess the supply chains and to try to mitigate dependence on Russian commodities. Fink concluded:
“Energy security has joined the energy transition as a top global priority.”
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