First Deputy Managing Director of the International Monetary Fund (IMF) Gita Gopinath recently revealed that some nations are reconsidering their reliance on the U.S. dollar. Gopinath explained that this originated in the recent shocks from the coronavirus pandemic, the geopolitical situation with Russia, and national security concerns. IMF Executive: Nations Examining Reliance on U.S. Dollar […]
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Record High Credit Card Debt: 55% of Americans Concerned About Repayment as Inflation Pushes Consumers to Credit Reliance
According to a Newsweek poll conducted by Redfield & Wilton Strategies, 55% of Americans are “very” or “fairly” concerned about paying off credit debt this year. The total credit card balance of Americans is at its highest point since the U.S. Federal Reserve began tracking the data, and current metrics indicate that Americans are using credit to mitigate inflationary pressures.
U.S. Consumers Rely on Credit Cards to ‘Navigate Costs Associated With Inflation’
While the most recent consumer price index (CPI) report from the U.S. Bureau of Labor Statistics indicates a cooling of inflation in the United States, Americans have turned to credit cards to offset the rising prices. According to a poll published by Newsweek and Redfield & Wilton Strategies, which surveyed 1,500 American citizens on May 31, approximately 30% of respondents have debt ranging from ,000 to ,000. Among Americans aged 22-34, around 22% have accumulated over ,000 in debt, while 21% of U.S. citizens aged 35-44 also carry the same level of debt.
Melissa Lambarena, a credit cards expert at Nerdwallet, stated to Newsweek that U.S. “consumers have been actively using their credit cards to navigate costs associated with inflation.” The Nerdwallet executive noted that increasing prices have caused some Americans to depend on their credit cards to meet their financial needs. According to statistics from Lendingtree, credit card debt has reached a record high for American consumers, citing consumer debt data from the Federal Reserve Bank of New York.
“Americans’ total credit card balance is 6 billion in the first quarter of 2023, according to the latest consumer debt data from the Federal Reserve Bank of New York,” a Lendingtree report details. “That’s unchanged from the fourth quarter of 2022’s record number, leaving the balance the highest since the New York Fed began tracking in 1999.”
American Credit Card Debt Has Risen Significantly Since Q3 2020, Credit Debt Has Surged on a Global Scale
The all-time high represents a 17% increase compared to the year prior, indicating that millions of Americans are relying on credit more than ever before to cover their expenses. Credit card debt had been steadily rising until the pandemic hit, and in 2020, it significantly declined as Americans reduced their usage of these financial tools. According to Newsweek’s survey, 55% of U.S. residents express significant or moderate concerns about their ability to repay credit card debt this year. The statistics also reveal that this trend is particularly pronounced among younger age groups, specifically those aged 18-24.
Moreover, Americans are not the only ones relying on credit card charges to make ends meet, as multiple sources indicate a global surge in credit card debt. Data reveals that the United States currently holds the highest amount of credit card debt, followed by Canada, the United Kingdom, and Japan. Conversely, Italy, Brazil, and India have comparatively lower average credit card debt. According to the Newsweek poll, certain experts suggest the necessity of “debt forgiveness” or propose that American consumers could potentially “benefit from payment holidays.’”
What are your thoughts on the rising credit card debt in the face of inflation? Share your thoughts and opinions about this subject in the comments section below.
Dollar Reliance Shrinks — China’s LNG Deal With Qatar Challenges ‘Frenemy’ Status With US
This week, China and Qatar strengthened their bond through a significant development on Tuesday. China National Petroleum Corporation (CNPC) and Qatarenergy inked a 27-year deal, outlining China’s commitment to procure liquefied natural gas (LNG) from Qatar on an annual basis. Under the agreement, China will import a substantial four million metric tons of LNG per year from the Gulf nation. Moreover, CNPC will also obtain an equity stake in Qatar’s North Field LNG project, further solidifying their collaboration.
China and Qatar Sign 27-Year LNG Deal Further Solidifying Relationship Between Both Nations
China is making steady progress in diversifying its currency deals and lessening its dependence on the U.S. dollar, and that includes fewer natural gas imports from the United States. Alongside various other BRICS nations, the Asian nation has been strategically maneuvering to reduce the prominence of the greenback in international trade.
In a noteworthy development at the end of March, China entered into a bilateral agreement with Brazil for the procurement of liquefied natural gas (LNG), with the settlement of the transaction taking place in yuan, facilitated by a French company.
On June 20, Reuters reported that Qatar and China have reached a substantial deal for LNG, with the two countries agreeing to collaborate for 27 years. Similar to the United Arab Emirates (UAE), Qatar is an emerging economy. Both regions were upgraded by the financial markets and benchmark firm MSCI in 2014 and joined the emerging BRICS economies.
According to the report, Qatarenergy signed a multi-year partnership with CNPC, enabling China to acquire four million metric tons of LNG annually. The news came after Qatar and the UAE announced the resumption of their diplomatic ties on Monday.
Simultaneous to the agreement with CNPC, Saad al-Kaabi, Qatarenergy’s chief, also signed an identical deal with China’s petroleum and petrochemical enterprise group Sinopec. “Today we are signing two agreements that will further enhance our strong relations with one of the most important gas markets in the world and key market for Qatari energy products,” Kaabi stated.
‘Right Now, China Is a Frenemy,’ Says Louisiana Senator
American officials are divided on the matter, as an editorial published by The Cradle explains that U.S. House speaker Kevin McCarthy praised China’s previous reliance on U.S. LNG reserves but questioned its necessity, citing a Politico interview. Thecradle.co also quotes Louisiana senator Bill Cassidy, someone who believes that China’s purchase of natural gas is a win-win situation.
“China gets guaranteed shipments at a certain price by providing upfront capital,” Cassidy said. “That, in turn, helps U.S. companies build export terminals, which drives demand for more U.S. drilling in places like Louisiana and Texas.” Cassidy further insisted China is a friendly rival. “Right now, China is a frenemy. If they — just like India, South Korea, Japan, the EU — are purchasing or buying, helping to pay for the capitalization of LNG export terminals, well, that’s a good thing.”
Will China’s strategic partnerships and efforts to diversify its energy imports disrupt the dominance of the U.S. in global trade, or is it merely a temporary ‘frenemy’ dynamic? Share your thoughts and opinions about this subject in the comments section below.
Russia to Increase Reliance on National Currencies in Energy Trade, Vows to Move Away From the US Dollar
Russia will increase its reliance on national currencies to settle payments for its energy resources, moving away from the US dollar, according to Russian Deputy Prime Minister Alexander Novak. Novak noted there is a great interest in acquiring Russian energy resources, leading Russia to accept more currencies for these settlements.
Russia Aims to Settle Energy Trades Away From the U.S. Dollar
Russia is gradually moving to the use of national currencies, such as the Chinese yuan and the Russian ruble, to settle energy trades, moving away from the U.S. dollar. Alexander Novak, Russian deputy prime minister, stated that this trend of adopting national currencies accelerated due to the sanctions enacted by Western nations as a consequence of the Russia-Ukraine conflict.
In a TV interview given to a Russian network, Novak stated:
The trend has changed very much to less use of dollars or euros. Given the current problems in settlements with these currencies, in our settlements we are moving only to national currencies, the yuan is in demand here, the ruble is in demand.
Furthermore, Novak clarified that China was already making payments for gas and oil in Chinese yuan and Russian rubles. Novak also explained that the country was open to receiving other currencies in this kind of settlement.
Escaping the Dollar
These measures would allow other countries to access the Russian energy market, letting them pay with currencies other than the U.S. dollar and the euro. Novak clarified that despite sanctions, there was still a great interest from other countries in acquiring these energy resources, having to settle transactions in national currencies.
The ultimate goal of the Russian government looks to be the abandonment of the dollar and the euro in the future. However, a report issued recently by analysts at the Bank of Russia indicates this change is “hardly possible” without making changes to the structure of foreign trade.
Nonetheless, Russia is currently advancing in the establishment of several trade agreements with countries like India and Iran, to create payment systems that facilitate alternate settlement routes.
BRICS, the G7 alternative bloc comprised of Brazil, Russia, India, China, and South Africa, is also preparing to discuss the issuance of a bloc-wide currency at the next BRICS leaders’ summit to be held in South Africa next August, per reports of Russian officials.
What do you think about the movement of Russia towards national currencies in settlements? Tell us in the comment section below.
ASEAN Countries Take Steps to Reduce Reliance on US Dollar for Trade Settlements
The finance ministers and central bank governors of the Association of Southeast Asian Nations (ASEAN) are exploring ways to decrease their countries’ dependence on the U.S. dollar and promote the use of local currencies in trade settlements. “We must remember the sanctions imposed by the US on Russia,” said Indonesian President Joko Widodo.
ASEAN Countries Seek to Reduce Reliance on USD
The finance ministers and central bank governors of the Association of Southeast Asian Nations (ASEAN) held a meeting on March 30-31 in Bali, Indonesia. One of the topics they discussed was reducing reliance on western currencies, such as the U.S. dollar. ASEAN comprises Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.
The meeting was also attended by representatives from six international
organizations, namely Asian Development Bank (ADB), ASEAN+3 Macroeconomic Research Office (AMRO), the International Monetary Fund (IMF), the Financial Supervisory Board (FSB), the Bank for International Settlement (BIS), and the World Bank.
At the conclusion of the two-day meeting, the ASEAN finance ministers and central bank governors released a joint statement, stating that they agreed to “reinforce financial resilience, among others, through the use of local currency to support cross-border trade and investment in the ASEAN region.”
One strategy the ASEAN finance chiefs discussed in order to shift away from U.S. dollar reliance was the adoption of their Local Currency Transaction (LCT) system. This system is an extension of a previous settlement system among ASEAN member states that allows for settlements in local currencies.
Indonesian President Warns of ‘Geopolitical Repercussions’ of Relying on Western Payment Systems
Indonesian President Joko Widodo recently urged regional administrations to start using credit cards issued by local banks and to gradually stop using foreign payment systems. He explained that this change is necessary to protect Indonesia from geopolitical disruptions, citing the example of sanctions imposed on Russia’s financial sector due to the conflict in Ukraine.
Moving away from western payment systems is necessary to protect financial transactions from “possible geopolitical repercussions,” Widodo described, adding:
Be very careful. We must remember the sanctions imposed by the U.S. on Russia.
The Indonesian president warned that the sanctions imposed on Russia had exposed the vulnerability of countries that rely on foreign payment systems. He emphasized the need for Indonesia to prepare for the possibility of facing similar sanctions in the future. The president stated that using local payment systems would help shield Indonesia’s economy from external shocks while also supporting the domestic economy by promoting local banks and businesses.
What do you think about ASEAN countries seeking to reduce dependence on the U.S. dollar? Let us know in the comments section below.
The Elephant in the Room: How This Project Addresses Human Reliance in Token Economy Models
Blockchain and DeFi protocols are only as strong as their weakest link
With today’s ever-growing blockchain landscape, token economies are bigger and more active than ever. When it comes to DeFi (decentralized finance) in particular, there is nearly billion locked in decentralized finance protocols, with users around the globe forming part of various innovative decentralized economies that are disrupting traditional finance.
The countless thousands of ecosystem participants that support these protocols and platforms, although kept safe by blockchain’s inherently secure infrastructure, also rely on what are mostly very capable project teams and treasury managers to efficiently manage token unlocks and distributions that take place after token sales, airdrops and other events. But this highlights an important issue, one that is often not spoken about alongside blockchain’s otherwise decentralized mechanics: human reliance within token economies is often a bomb waiting to go off and, as long as this human component exists within cryptocurrency and DeFi ecosystems, the space will not be fully decentralized.
Polkalokr, a new and highly customisable escrow platform built on the Polkadot blockchain, looks to offer a solution to this problem with governance-as-a-service and a model that takes token distribution out of the hands of projects teams. The team behind the protocol recently announced the closing of a successful private sale round, one that included prominent funds such as Moonrock Capital, AU21 Capital and LD Capital.
Bad actors and human error: Current token economies
The rapid evolution of blockchain technology and DeFi has seen some truly amazing solutions emerge in recent years that can tackle and replace wholly outdated frameworks across a plethora of industries in a decentralized manner. This being said, the complex token economies that underpin these projects can still arguably be viewed as centralized; project teams are more often than not the responsible party when it comes to token management and, with millions of dollars pouring into token sales at the height of crypto mania, this can lead to some troubling results.
Simply searching for the keywords “crypto scam” will net plenty of results that serve to illustrate the pitfalls accompanying centralized token holding models. Almost billion in user funds from across the cryptocurrency landscape was reportedly stolen in 2020 alone, with incidents ranging from poor private key management by project teams, to full-on exit scams by the founders themselves. These incidents all highlight the change in approach and overall token economy redesign that is required if blockchain’s promise of true decentralization is to be fulfilled.
Even when taking bad actors out of the equation, token treasuries are still not fully safe in the hands of project teams, as poor security practices or simply a lapse in judgment can result in millions of dollars of user funds being lost, locked or burned forever. The processes that run within smart contracts are complicated and unforgiving, with even the smartest of minds able to make a costly mistake at the touch of a button.
Putting the power back into participation
Headed up by a UK-based team with a strong background in computer programming and infrastructure project management, Polkalokr offers project developers a suite of modular building blocks enabling them to create trustless escrow payout options for a wide variety of use cases. The protocol’s versatile, multi-chain solution suits any token locking requirement and presents both projects and users with a myriad of new opportunities, including fully-customizable event-based token unlocks and monetization of locked tokens.
Polkalokr consists of Lokr and Swapr, with the latter product offering users cross-chain atomic swaps of any tokenized digital asset with privacy & multi-sig options. Functionality and useability is at the forefront of the protocol’s design and implementation; Polkalokr aims to give both projects and their participants access to a one-stop-shop with comprehensive locking, distribution, monetization, swapping and even insuring of the tokens that glue today’s blockchain ecosystems together.
Building natively on Polkadot, the Polkalokr team boasts a dedicated Rust developer that will deliver beyond the promises of many Polkadot-based projects, many of which have had to rely on Ethereum bridges alone so far due to a lack of qualified Rust and Solidity programmers in the blockchain space. Plans for a public token sale are to be announced in the coming weeks.
Image by Buffik from Pixabay
What Twitter Meme Wars Say About Cryptos Reliance on Figureheads
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BRICS Nations Ponder Digital Currency to Ease Trade, Reduce USD Reliance
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