While flight to safety investing has traditionally been directed towards investments with low risk-return profile, it is interesting to see how the events around the world have turned people to bitcoin, which is typically synonymous with high risk-reward.
Bitcoin’s unique ability to be used either as a store of value or medium of exchange has attracted people to choose it to park their money. Here’s a look at how bitcoin is becoming a solution to multifaceted problems in different parts of the world.
In the past months, several institutions in the Caribbean Islands have seen the termination of Correspondent Banking Relationships (or simply CBRs) by global banks; the number was at 16 across five countries as of May 2016, per an IMF report.
While the full impact of such an exodus isn’t easily quantifiable, IMF chief Christine Lagarde’s statement reflects its deep impact; she says, “Correspondent banking is like the blood that delivers nutrients to different parts of the body.” The immediate effect of CBR withdrawal is loss in business confidence and a discomfort in basic transactions such as sending money in and out of the region.
In the face of such problems, regulatory authorities have shown openness