WEF Says Crypto Will Go Mainstream, But IMF Predicts 2023 Recession

The CBDDC supporters The World Economic Forum (WEF) believes that responsible regulation and long-term experimentation will ensure cryptocurrency’s place in the global economy.

The global body stated in a report published on January 2, 2022, that the involvement of traditional banks like JPMorgan with crypto will mature the asset class into “responsible, always-on” internet finance.

The WEF chastised regulators for failing to take decisive action to prevent the 2022 meltdowns that caused the crypto winter. When comparing the winter to the dot-com bubble crash, the WEF admitted that the bear market in crypto helped to root out speculation and put the industry on equal footing with established institutional players.

While the WEF lacks decision-making authority, it wields considerable influence over the policymakers, politicians, and business leaders who attend its annual meeting in Davos, Switzerland.

So far, its crypto outlook has been heavily focused on policy and sustainability concerns. The COVID-19 pandemic came before the organization’s initiative to coordinate global spending on equality and sustainability.

Several crypto companies, on the other hand, aggressively promoted the industry at the 2022 WEF summit. Jeremy Allaire, CEO of Circle, and Brad Garlinghouse, CEO of XRP, discussed regulations and the future of remittances.

While recently praising the United States for its tax infrastructure and inflation-fighting measures, International Monetary Fund Managing Director Kristalina Georgieva predicted that one-third of the world would enter a recession next year.

She believes that the strength of the US labour market will assist the world in overcoming the recession.

Unlike the WEF, the IMF is mandated by the UN to promote international monetary policy coordination, financial stability, and international trade. It also supports the World Economic Forum’s sustainability goals and has previously criticised cryptocurrency mining as a means of evading sanctions.

Georgieva has previously spoken at WEF events, and both organisations support central bank digital currencies (CBDC).

Several major U.S. banks polled by the Wall Street Journal agree that dwindling pre-pandemic savings and a declining housing market point to a “mild” recession in the United States in 2023. Americans have reduced their pre-pandemic savings from $2.3 trillion to $1.2 trillion. Banks have also tightened lending policies, as has been the case in previous recessions.

According to forecasts, the Fed will cut interest rates in the third or fourth quarter. This could imply that riskier assets will end the year marginally higher.

Some, however, see potential in Bitcoin’s decentralised network and believe that the blockchain can help businesses survive a downturn.

Michael Saylor recently stated on Twitter Spaces that software maker MicroStrategy may soon provide enterprises with Bitcoin Lightning Network tools. Saylor is the executive chairman of MicroStrategy and the company’s Bitcoin strategist.

The Lightning Network is a payment network that orchestrates payments between nodes based on cryptographic rules.

Lightning network payments are faster than traditional Bitcoin payments and are only limited by internet speed. The channel’s payments are aggregated to post the main Bitcoin network’s final balance.

Companies could charge website visitors Bitcoin for visiting their site, free of the constraints of exchange rates.

Strike was an early supporter of the Lightning Network, allowing businesses to integrate Bitcoin payments through its application programming interface (API). Strike used the Bitcoin network to provide remittance services to Argentina and El Salvador.

With recessions expected to cause significant job losses, wider adoption of Strike’s API could enable low-cost remittances that could benefit Argentina. Furthermore, MicroStrategy’s enterprise efforts may result in shorter settlement times for international B2B transactions.