BlackRock’s Fink Says Russia-Ukraine Crisis Could Accelerate Digital Currencies
NEW YORK: BlackRock Inc chief executive Larry Fink said on Thursday that the Russia-Ukraine war could end up accelerating digital currencies as a tool for settling international transactions, as the conflict upends the dynamics of globalizing last three decades.
In a letter to shareholders of the world’s largest asset manager, Fink said the war will cause countries to reassess currency dependencies and that BlackRock is exploring digital currencies and stablecoins due to heightened customer interest.
“A carefully designed global digital payment system can improve the settlement of international transactions while reducing the risk of money laundering and corruption,” he said.
It seemed to take on a different tone from May of last year, when Fink raised concerns about volatility and said it was too early to determine if cryptocurrencies were just one thing. speculative trading tool.
In Thursday’s letter, the CEO of the $10 trillion asset manager said the Russia-Ukraine crisis had ended the forces of globalization at work over the past 30 years.
Access to global capital markets was a “privilege, not a right”, he said, adding that BlackRock suspended the purchase of any Russian securities in its active index portfolios after the invasion of Russia. Ukraine via Moscow.
“Over the past few weeks, I have spoken to countless stakeholders, including our customers and employees, who are all seeking to understand what could be done to prevent the deployment of capital into Russia. We think that’s the definition of our fiduciary duty,” Fink said.
BlackRock Inc’s total client exposure to Russia had fallen to less than $1 billion earlier this month, down from $18 billion before Moscow’s invasion of Ukraine led to Western sanctions and the Russian stock market shut down, according to figures provided by the asset manager this month.
Russia calls its actions in Ukraine a “special operation”.
The impact of the conflict on global supply chains – already hammered home over the past two years due to the coronavirus crisis – is expected to contribute to inflationary pressures that are pushing global central banks to tighten monetary policies and roll back measures. COVID-19-induced accommodations.
“While business and consumer balance sheets are strong today, giving them more cushion to weather these headwinds, a large-scale redirection of supply chains will be inherently inflationary,” Fink said.
He said central banks faced a dilemma they hadn’t faced in decades, having to choose between living with high inflation or slowing economic activity to contain price pressures.
Energy prices have surged as sanctions on Moscow prompted companies and countries to reassess supply chains and try to reduce their dependence on Russian raw materials.
“Energy security has joined the energy transition as a top global priority,” Fink said.