How does cryptocurrencies impact the world financial markets?

Mr. Nguyen Si Hoang, an expert of Fintech, said that cryptocurrencies will have the greatest influence on stable coins, making them no longer necessary.

A: In your opinion, has the rapid escalation of US-China tensions increase the demand for new investment assets such as cryptocurrencies?

B: We can see that the US-China trade war affects many economic fields around the world, in which the financial market has become increasingly unstable around the world. Clearly, the escalating tensions between these two economic powers have greatly affected the development strategies of many countries and both the demand for consumption and property ownership.

Especially recently, the phrase "Cash is the King" is very popular in the online community. Cash accumulation, storing cash and investing in real estate, stocks and especially cryptocurrencies are being focused on by many institutional and individual investors.

With cryptocurrencies, although this market is not too large, it is an extremely attractive investment channel with a large fluctuation range and instability no different from the global economic, financial, transactional situation. 24/7, not according to the strict T + 3 regulations like securities ... For investors who like risk and risk, cryptocurrency is not a bad choice in today's digital economy.

A: - How will countries rushing to experiment with cryptocurrencies will affect the world financial markets, sir?

B: Countries participating in the race to test cryptocurrencies of central banks (CBDCs) have both positive and negative impacts on the world economy in general and the traditional finance-banking sector in particular.

First, CBDC creates the potential for a more efficient payment system than traditional payment systems with high cash management costs. CBDC can reduce entry barriers for new companies in the payment sector.

Second, CBDC provides the opportunity to access financial services for consumers, without the need for a bank account. The strong resurgence of non-cash payment platforms such as Alipay, Wechat in China is a good case study for the widespread adoption of CBDC.

Third, CBDC will help economic growth and promote digital innovation and transformation and create an attractive cryptocurrency ecosystem that not only leads to enhanced economic activity, but also spillover effects to other fields of technology.

Fourth, the CBDC can be used as a direct monetary policy tool if it is interest-bearing, which would allow more direct control of the money supply.

When CBDC was born, people no longer need to deposit money in the bank but will store it in the virtual wallet provided by the central bank. Thus, commercial banks that want to mobilize deposits from the people need to raise interest rates to be more attractive. And if it doesn't raise enough money, the central bank must pump more money into the market. This has the potential to increase inflation.

In addition, CBDC also creates competition in the banking sector. The introduction of a solution that almost replaces bank deposits and traditional financial services will threaten the business models of commercial banks.

A: The digitization of conventional currencies inevitably leads to the first hit with today's popular cryptocurrencies. So how will the popular cryptocurrencies be affected, sir?

B: The influence of CBDC on popular cryptocurrencies is still controversial because CBDC has not been widely applied. Many economists believe that the birth of CBDC will kill Bitcoin as well as other cryptocurrencies when it inherits all the properties of a cryptocurrency such as safety, transparency, even privacy. at the same time, under the auspices of the central bank.

CBDC will have the greatest influence on stable coins such as USDT, EURT ... These coins will no longer be needed because CBDC can completely replace them. Furthermore, the companies behind these stablecoins have always been questioned about the source of collateral for issuing these coins.

For example, Tether, the company behind the most popular currency USDT, is often involved in the transparency gossip about issuing more and more USDTs. CBDC is behind the central bank, so the issuance of CBDCs is in accordance with the monetary policy of the country. However, there is one feature that the CBDC cannot replace bitcoin: decentralization. Bitcoin gained popularity because there was not a single financial institution or institution that could control the Bitcoin network.

Therefore, Bitcoin will still be the choice of people who have no faith in traditional governments or banking systems. In addition, other cryptocurrencies are also evolving to bring high applicability in other areas such as distributed application .... where CBDC currency cannot be applied.

A: So, according to you, should there be a development direction for mutual benefits?

B: First of all, governments need to recognize that the blockchain and cryptocurrency revolution is inevitable and cannot prevent it from growing. Governments need to have a more open outlook on cryptocurrencies and have strict regulations to create the legal foundation for the thriving blockchain ecosystem.

CBDC will be the nucleus creating a new ecosystem for the non-cash and decentralized economy. The birth of CBDC also helps increase people's access to cryptocurrencies. For other cryptocurrencies, each coin will have its own application and not necessarily be replaced by the CBDC. These coins will create its own ecosystem, and develop in parallel with the CBDC.

Thank you Sir!

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