The Federal Reserve Bank of New York, one of the 12 federal reserve banks of the United States, recently released a survey report ranking the potential financial risks over the coming 12 to 18 months.
According to the report, crypto was ranked 12th on 14 risks. In contrast, geopolitical tensions, i.e., Russia’s invasion of Ukraine, persistent inflation, foreign disinvestments, and higher energy prices, were amongst the top concerns for the U.S. economy.
Survey participants opined that Russia’s invasion of Ukraine was ranked first, followed by the persisting inflation or the tightening monetary situations. Risk asset valuations and foreign disinvestment were ranked third and fourth, respectively, followed by higher energy prices and corporate credit stress at fifth and sixth places, respectively. The seventh and eighth places were occupied by elevated inflation regimes and cyberattack, respectively.
Inflation regime in simple terms means the inflation system which according to economists can be divided into 3 categories namely- low or stable inflation, high or variable inflation, and hyperinflation. The elevated inflation regime hence means the rising or increasing system of inflation.
Following them came the U.S.- China geopolitical tensions and variants of Covid-19 at ninth and tenth places, respectively.
The crypto position in the list signifies a positive mindset of the investors and a surging interest in favor of crypto with more awareness of it. However, the Federal Reserve continued its anti-crypto stance and specified the figures involving the risk in crypto investments. The cryptocurrencies included in the report, i.e., Bitcoin, Ethereum, Binance Coin, Cardano, and Ripple, have experienced about 69% in value compared to the peak in November last year.
While mentioning the collapse of the Terra (LUNA) ecosystem, it highlighted the agency’s direct exposure to native stablecoin TerraUSD (UST), leading to their distress and bankruptcy.
The Federal Reserve also stated that the speculations and risk appetite seem to be the most significant driving factors of crypto-asset prices, which have recorded big swings in recent years.
Countries across the globe are showing positive signs of adopting digital assets, including India, Vietnam, Brazil, etc.