Can Cryptocurrencies Become An Inflation Escape?

The Bank of Canada has commented on the discussion of whether crypto assets can be a hedge against inflation. Vice President Carolyn Rogers believes that Bitcoin or any other crypto asset cannot be a hedge against rising inflation. However, Rogers said that cryptocurrencies can be useful in different fields. Details are here:

Different countries have shown different approaches towards crypto assets. While the question of whether cryptocurrency can be a protection tool against inflation continues to be discussed, a remarkable statement came from the Bank of Canada on this issue.

Is Bitcoin an effective strategy to hedge inflation?

Bank of Canada Governor Tiff Macklem and Vice-President Carolyn Rogers answered questions from lawmakers at the Federal Finance Committee session yesterday. Liberal MP Yvan Baker asked the bank's executives at this meeting whether the use of digital assets such as Bitcoin is an effective strategy to hedge inflation.

Carolyn Rogers stated that she does not think cryptocurrencies such as Bitcoin will replace the Canadian dollar anytime soon. Rogers also explained that he thinks Bitcoin or any other crypto asset cannot be a hedge against rising inflation:

If Canadians are looking for a stable source of payment and a stable source of value, cryptocurrencies are not really meeting those aspirations. We do not see crypto assets as a way for Canadians to give up inflation or a stable source of value.” Carolyn Rogers, Deputy Governor of the Bank of Canada

Rogers emphasized that volatility in cryptocurrencies is more than gasoline prices, the Canadian dollar and most commodities. The vice president also underlined that this technology promises some innovations:

There are some important innovations in this area. I think the law will allow us to explore these innovations, but we will also look for ways to take advantage of these benefits in a more regulated environment,” Carolyn added.

Read also: Best Stocks to Own During Inflation - Warren Buffett's Choice

Politician focus on cryptocurrencies

The inflation rate in Canada had risen to 6.7% last month. This data was the highest inflation data in the last 31 years. It is known that cryptocurrencies are used by large masses of people in the country and this mass is growing day by day. Some politicians in the country have a very positive approach to crypto assets.

Conservative Party leader candidate Pierre Poilievre has recently stated that he will work to make Canada "the blockchain center of the world". Poilievre also announced that under his rule, crypto assets could be legally accepted in the country.

After the development of crypto assets in the last few years, it was seen that politicians in different countries made various promises in this area before the election. For example, ahead of the Presidential elections held in March in South Korea, Presidential candidate Yoon Suk-yeol announced that he would review harsh regulations for crypto assets.

Announcing that he will also support blockchain initiatives in the country, Yoon managed to win the election by a small margin. In the Presidential elections held in France last week, Emmanuel Macron attracted attention with his statements on the crypto ecosystem. Macron stated that his country and Europe should not lag behind in areas such as Web 3.0 and Metaverse.

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