The five most interesting developments in the economy right now

The world of cryptocurrencies is going through a tough time all over the world. Bitcoin price fell overnight to its lowest level since December 2020 below 28,000 hole. Bitcoin has lost almost 60% since the peak in November ($68,991). its market value. The other major cryptocurrencies look alike.

The day before, the exchange rate of one of the largest so-called “stablecoins”, i.e. cryptocurrencies, the value of which was always to be the same as that of the US dollar, had definitely collapsed. Thanks to them, investors in the crypto market do not have to switch back to the real dollar after closing their investments, but can keep their capital in something that mimics the dollar while still being part of the cryptocurrency market. . At the start of the week, however, a large wave of supply “peeled” the rate of the stablecoin Terra-USD from the dollar, so that its quotes fell to 62 cents on Tuesday and below 30 cents on Thursday.

Anyway, no matter how much Terra-USD is now, this instrument has lost its meaning because it no longer costs a dollar. Some investors perceive it as a collapse of an important part of the architecture of the crypto world, hence a lot of nerves and the selling off of the biggest “regular” cryptocurrencies. Coinbase, the organizer of one of the cryptocurrency exchanges, also contributed to the deterioration of the situation, informing the publication of the results that in the event of bankruptcy, investors will not recover their cryptocurrencies.

Another problem is that in the previous months, cryptocurrencies did not appreciate and their turnover gradually decreased. According to some economists, capital has stopped flowing to them, because in times of rising interest rates, they have permanently lost their appeal (like many Nasdaq-listed companies).

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2. The government will create bonds for us with better interest than bank deposits

Already in June, we will be able to invest our money in bonds bearing better interest than bank deposits that the government will issue specifically to create such an alternative. The government calls these bonds “anti-inflationary,” even though they will yield a profit well below inflation. However, they will remain attractive compared to other options available to savers.

The obligations must be annual and biannual. Annual interest rates will be at the main NBP rate, so today it would be 5.25%. per year, and from June it will probably be 5.75%. or 6 percent (The Monetary Policy Council is expected to raise interest rates at its next meeting on June 8). Two-year rates will bear interest above the NBP rate, but it’s unclear how much more. We will have more details on May 25. Inflation, meanwhile, is over 12%.

Presenting the idea, the prime minister again attacked banks for not wanting to raise interest rates on deposits, saying they were behaving this way for the sake of profit. In recent months, the banks have not done this because they do not need new deposits, because there are a large number of them in the market anyway.

This is a side effect of the anti-crisis shield in force in 2020, when the government injected well over PLN 100 billion into the economy, saving it from pandemic collapse. Today, individuals and businesses keep that money in banks, so they don’t have to fight higher interest rates to get extra funds. The Prime Minister wants to use new bonds to solve the problem to which he himself contributed two years ago.

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