Global Inflation Is Rising: How Stable Coins Help Protect Savings
More and more people are using stablecoins to protect themselves against inflation, as they offer many advantages.
Analysis
Economies around the world are facing a host of challenges caused by rising inflation. High inflation devalues national currencies, which in turn drives up the cost of living, especially in scenarios where incomes remain unchanged.
In the United States, the government has reacted aggressively to inflation. The country hit an inflation rate of 9.1% in June, prompting the Federal Reserve to implement a series of fiscal countermeasures designed to prevent the economy from overheating. Rising interest rates was one of them.
The Fed's hike in interest rates has consequently slowed consumer spending and business growth in the country.
The inflation-fighting approach has also boosted the value of the US dollar against other currencies due to tight controls on dollar liquidity. As 79.5% of all international trade is conducted using the dollar, many countries are now paying a premium for imports to compensate for the rise in the value of the dollar, which is worsening inflation in these importing countries. /p>
Subsequently, citizens of some struggling economies have started converting their money into more stable foreign currencies to protect their money from depreciating in value, and many of them are turning to stablecoins to get there. achieve.
Whitney Setiawan, research analyst at crypto exchange Bitrue, told Cointelegraph, “With the US dollar seeing strong appreciation against other fiat currencies, most crypto-savvy users have a vested interest in holding stable coins."
Setiawan also predicted that the stablecoin industry is likely to disrupt the remittance industry in the near future due to the multitude of benefits offered by stablecoins.
“With interest in stablecoins fueled by a variety of factors, I can predict that it will only be a matter of time before this asset class knocks the remittance industry down by a significant margin” , she said.
On this last point, remittance companies have indeed taken notice and have in recent months taken steps to claim a share of the stablecoin market. MoneyGram, for example,
More and more people are using stablecoins to protect themselves against inflation, as they offer many advantages.
Analysis
Economies around the world are facing a host of challenges caused by rising inflation. High inflation devalues national currencies, which in turn drives up the cost of living, especially in scenarios where incomes remain unchanged.
In the United States, the government has reacted aggressively to inflation. The country hit an inflation rate of 9.1% in June, prompting the Federal Reserve to implement a series of fiscal countermeasures designed to prevent the economy from overheating. Rising interest rates was one of them.
The Fed's hike in interest rates has consequently slowed consumer spending and business growth in the country.
The inflation-fighting approach has also boosted the value of the US dollar against other currencies due to tight controls on dollar liquidity. As 79.5% of all international trade is conducted using the dollar, many countries are now paying a premium for imports to compensate for the rise in the value of the dollar, which is worsening inflation in these importing countries. /p>
Subsequently, citizens of some struggling economies have started converting their money into more stable foreign currencies to protect their money from depreciating in value, and many of them are turning to stablecoins to get there. achieve.
Whitney Setiawan, research analyst at crypto exchange Bitrue, told Cointelegraph, “With the US dollar seeing strong appreciation against other fiat currencies, most crypto-savvy users have a vested interest in holding stable coins."
Setiawan also predicted that the stablecoin industry is likely to disrupt the remittance industry in the near future due to the multitude of benefits offered by stablecoins.
“With interest in stablecoins fueled by a variety of factors, I can predict that it will only be a matter of time before this asset class knocks the remittance industry down by a significant margin” , she said.
On this last point, remittance companies have indeed taken notice and have in recent months taken steps to claim a share of the stablecoin market. MoneyGram, for example,
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