Former head of Korea Financial Commission: “Cryptocurrnecy will increase as well”
“There has been signs of continuous decoupling between the real economy and finance since the outbreak of the coronavirus,” said Shin Je-yoon, former head of the Financial Services Commission, at a recent forum. “It is because the government is releasing a huge amount of money. Once capital is released to the market, they tend to stick to stocks, gold and other types of asset. I strongly believe that demand for virtual currency will increase as well." Shin said that the current crisis in the economy has derived from external factors such as anxiety and ignorance. What he was most worried about was what’s called economic nationalism. “Once economic nationalism comes about, there will be a tendency to nationalize fundamental industries and ban exports of raw materials. There is a possibility that the economy will return to self-sufficiency.” Shin also noted that economic nationalism could lead to a virtuous cycle of recession. “If global demand decreases due to economic nationalism, some developing countries will face a debt crisis and companies will go bankrupt,” he said. “Then there will be a massive amount of distressed debt, resulting in a financial crunch leading to yet another recession.” Shin said the latest conflict between the U.S. and China could spread into the capital and currency market. In the beginning, the U.S. pressured its allies to not use Chinese products as well as levying high taxes on imported goods from China. Shin said that U.S. was just testing the waters through these actions. The real conflict will break out in the capital and currency market, he said. The two countries have started to monitor its currency market. “China is currently pushing for the central bank’s digitization of currency in the sake of making a cashless society and going for more transparent transactions. However, these are just excuses. The Chinese government is actually trying to control the country's financial trade through a digital platform,” Shin said. The outbreak of the coronavirus pandemic will lead to more demand for virtual currency, because the government’s release of money will try to stick to some kind of assets including real estate, stocks or gold or virtual currency, according to Shin. However, since cryptocurrency could put the country’s sovereignty over currency at risk, the increased demand for virtual money will only be allowed in select countries. For example, countries that have weak infrastructure for finance such as Venezuela or Zimbabwe will not allow commercial banks to handle virtual currency. In Korea, as well, the authorities are still skeptical about crypto money. “Every government official I have seen until now have shown strong repulsion towards cryptocurrency,” Shin said.