Regardless of when and how this crisis will come out, Julius Baer’s experts believe that there are two important derivatives of everything that is happening, two aspects that deserve to be taken into account. On the one hand, the growing debt at a global level and, on the other, the incipient cryptocurrency market.
Global debt today exceeds 250 billion dollars, equivalent to more than 320% of the Gross Domestic Product (GDP) of the world. For years, governments, businesses, and individuals have benefited from lower and lower interest rates. Looking ahead, the outlook is even more radical as central banks continue to lower financing costs to foster greater dynamism in economies. “Close to zero and even negative rates for several years in developed markets could foster a greater appetite for debt. Particular attention must be paid in the United States due to the increase in fiscal and corporate debt, as well as in China. due to the increase in the indebtedness of non-financial companies, “says Esteban Polidura, an expert from Julius Baer.
Regarding cryptocurrencies, the great interest they arouse in investors is not news. “We believe that the development of digital central bank currencies (CBDCs) will attract even more expectations about many of them. and with it, the possibility of speculative increases “, points Polidura.
China has stepped up its development of the e-RMB, which could become the first digital currency operated by a major economy. The United Kingdom, Sweden and the Bahamas, among others, are also under analysis. “Today, the great drawback of investing in cryptocurrencies is that there is no tangible asset behind many of them or cash flows that an investor can aspire to. This renders traditional valuation methods obsolete. As a result, speculative investments will tend to dominate the price movements for these assets, at least in the medium term, “concludes this expert.