Analyst William Peets: Deflationary Impact of Bitcoin, Cryptos on Global Finance is Underestimated

  • The presence and competition of local cryptocurrencies ultimately helps to lower inflation.
  • The former Bank of England governor believes that the world is pushing itself towards a worse financial crisis that what happened in 2008.

William Peets, an investment strategist, and CIO/portfolio manager, recently was interviewed by Real Vision Finance on October 30th. During the interview, he spoke about blockchain and the way it represents changes in technology through the generations, coming with significant implications for the current financial system. However, he believes that many people have underestimated the deflationary impact of cryptocurrencies and blockchain, in terms of global finance.

Applying this technology will likely disrupt the monopoly that traditional financial services have, as Peet sees it.

He commented,

“Security issuance, tokenization of real assets, trading of those assets, custody-all those things can potentially be done in a more efficient manner with distributed ledger technology. And that shrinks the margins of the likes of a State Street or Northern Trust, or these traditional banks and incumbents, again, which is all deflationary.”

He reiterated that much of the market still doesn’t see the impact that this technology could actually make, especially considering how quickly the change could take hold. After 2008, he stated that the blockchain’s deflationary impact could ultimately manage some of the major issues the system has, especially concerning debt.

Peets commented,

“What's going on in the macro environment as it relates to indebtedness and the amount of debt that's trading out and negative interest rates, it really starts to make you think about the current monetary system, and if that's sustainable.”

Analysts believe that cryptocurrency will ultimately have a positive impact on the global financial sector, even before it gains widespread traction. In a report from the summer of 2019 stated that private digital currencies are competitive at the local level, which restrains monetary policy and creates less inflation.

Mervyn King, the former Bank of England governor, recently gave a speech at the International Monetary Fund’s general meeting. He stated that this work is in a “sleepwalking” state, pushing them closer towards a financial crisis that will be even worse that what the world experienced in 2008.

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