The Rise of Stablecoins as an Inflationary Shield

As the global economy faces inflationary pressures, businesses are searching for effective ways to shield themselves from the effects of rising prices. The International Monetary Fund (IMF) has recently projected that global inflation will remain high until 2025, with weak growth forecasts for many countries. Additionally, the Ipsos “What Worries the World” survey in April 2023 showed that inflation is a top concern for citizens in several countries, including Argentina, Australia, Canada, Colombia, France, Germany, Great Britain, Poland, Singapore, South Korea, Spain, Turkey, and the US.

In response to these challenges, stablecoins have emerged as a popular solution for businesses seeking to shield themselves from inflation. Stablecoins like USDC and USDT are cryptocurrencies designed to maintain a stable value, usually pegged to stable assets like fiat currencies or commodities. They offer businesses a low-cost alternative to traditional banking services and near-instant settlement times.

While stablecoins are not a foolproof solution against inflation, they do provide some degree of stability and protection against the volatility of the market and are gaining traction in the business world. In a recent article by Coindesk, it was reported that stablecoins are being used as an inflationary shield by businesses in Latin America and Europe. The report highlighted the use of stablecoins to protect savings and maintain purchasing power in the face of rising inflation (CoinDesk, Apr 2023).  Similarly, Bloomberg reported on Coinbase’s call for the creation of inflation-proof stablecoins, further highlighting the growing recognition of stablecoins as an effective tool to combat inflation (Bloomberg, Mar 2023).

At Finext Eastern Bank (FEB), we recognize the challenges that businesses face in a volatile economic environment. As such, we have been at the forefront of adopting stablecoins at the core of our banking ecosystem since our establishment. Our stablecoin offerings are just one example of our commitment to meeting the evolving needs of businesses in a changing economic landscape.

In conclusion, as inflation rates continue to rise, businesses must find innovative solutions to protect their bottom line. Stablecoins offer a promising alternative for businesses seeking to shield themselves from inflation while enjoying low-cost transactions and quick settlement times. While not a perfect solution, their growing popularity attests to their potential as a tool for businesses to navigate a volatile economic environment. 

At FEB, we are committed to providing our clients with the resources they need to succeed. If you’re interested in learning more about how FEB can assist your business, please contact us at [email protected].

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