According to analysts, there will be more Americans moving away from traditional finance and entering the crypto market if the US Federal Reserve (Fed) relaxes the post-2008 financial regulations. These details come from a study published by Weiss Ratings this May 22nd.
Meanwhile, the Fed is set to meet on May 30th and consider watering down the “Volcker Rule” which will be a major deregulatory move. If this happens, the relaxing of the rule would allow thousands of banks to make high-risk profit-seeking trades with less government oversight.
If all of the plans go ahead for the Fed, there will also be an increased systemic financial risk that will eventually push citizens to conclude that “cryptocurrencies are better as a safe depository” according to the Weiss analysts.
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As the studies by Weiss say, banks are lobbying for more freedom to trade speculative assets such as derivatives whose ownership is “extremely centralized”.
“These potentially toxic assets [such as derivatives] are not simply investments and speculations banks make with their own capital,but pose risk to clients’ own deposits in the event of another major system crisis”
Weiss also argues that while the public on average assumes that banks provide them with simple, safe and unencumbered storage for [their] savings, in reality, the traditional monetary system continues to offer banks “rich rewards for excessive risk-taking”.
There are many scandals, failures, and threats present in the US monetary system, turning the public sentiment against the traditional banking system in the past. One report even found that as many as 92% of millennials expressed their distrust of banks.
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