Deutsche Bank’s Massive ‘Multi-Trillion Dollar’ By 2030 Bitcoin Question

Bitcoin and cryptocurrencies have been written off by many as nothing more than a flash-in-the-pan fad, riddled with scams and criminals.

The bitcoin price, which looks set to close the year at twice its January price, has remained highly volatilewhile sluggish bitcoin adoption continues to worry those in the crypto industry.

Now, amid warnings that the “fragile” fiat currency system will be put under strain in years ahead, Germany’s troubled Deutsche Bank has asked, “will fiat currencies survive,” in what it calls the “multi-trillion dollar (or bitcoin) question.”

“The forces that have held the current fiat system together now look fragile and they could unravel in the 2020s,” Deutsche Bank strategist Jim Reid wrote in a report looking at 24 alternative ideas for the next 10 years.

“If so, that will start to lead to a backlash against fiat money and demand for alternative currencies, such as gold or crypto could soar. The demand for alternative currencies will therefore likely be significantly higher by the time 2030 rolls around.”

The report blamed “decades of low labor costs” and inflation for weakening the fiat system and comes after a year that’s seen the bitcoin price boosted by social media giant Facebook’s plans to launch its own private cryptocurrency, dubbed libra, and countries from China to the European Union begin to explore how to create digital currencies of their own.

Central banks are still struggling to offset the effects of the global financial crisis that birthed bitcoin, with worries another so-far-unidentified crisis could be looming on the horizon.

“Will fiat currencies survive the policy dilemma that authorities will experience as they try to balance higher yields with record levels of debt,” Reid asked. “That’s the multi-trillion dollar (or bitcoin) question for the decade ahead.”

Bitcoin is often touted as an antidote to the central bank, debt-based monetary system, picking up the moniker “digital gold” for its built in scarcity. There will only ever be 21 million bitcoin, with the supply drying up in the distant year of 2140.

Reid’s comments put him at odds with outgoing European Central Bank executive board member Benoît Cœuré, who last year described bitcoin as “the evil spawn of the financial crisis,” and has outlined plans for a European “central bank digital currency” to rival the likes of Facebook’s libra.

Deutsche Bank, which has seen its value cut by 90% in the ten years since bitcoin was created, has also predicted corporate and government banked cryptocurrencies will drive crypto adoption.

“Assuming governments back cryptocurrencies, and consumers want them, adoption rates will drive the timeline for mainstream use,” Reid wrote. “If current trends continue, there could be 200 million blockchain wallet users in 2030.”

Meanwhile, other banks are warning that the year ahead could bring an overhaul of the “status quo.”

“We see 2020 as a year where at nearly every turn, disruption of the status quo is an overriding theme,” Saxo Bank’s chief economist Steen Jakobsen wrote this week in a report titled “10 Outrageous Predictions for 2020.”

“The year could represent one big pendulum swing to opposites in politics, monetary and fiscal policy and, not least, the environment. In policy making, it could mean that central banks step aside and maybe even slightly normalize rates, while governments step into the breach with infrastructure and climate policy-linked spending.”

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I am a journalist with significant experience covering technology, finance, economics, and business around the world. As the founding editor of Verdict.co.uk I reported on how technology is changing business, political trends, and the latest culture and lifestyle. I have covered the rise of bitcoin and cryptocurrency since 2012 and have charted its emergence as a niche technology into the greatest threat to the established financial system the world has ever seen and the most important new technology since the internet itself. I have worked and written for CityAM, the Financial Times, and the New Statesman, amongst others. Follow me on Twitter @billybambrough or email me on billyATbillybambrough.com. Disclosure: I occasionally hold some small amount of bitcoin and other cryptocurrencies.

Source: Deutsche Bank’s Massive ‘Multi-Trillion Dollar’ By 2030 Bitcoin Question

 

Deutsche Bank Ensnared by Billion-Dollar Malaysian Fund Scandal

A multi-billion-dollar fraud scandal perpetrated by an investment arm of the Malaysian government appears to have ensnared another major global financial institution — Deutsche Bank  (DBGet Report) — which already is reeling from massive restructuring efforts.

The Wall Street Journal reported on Thursday that the Justice Department is investigating whether the German lender violated foreign corruption or anti-money-laundering laws in its work for the 1Malaysia Development Bhd. fund, which included helping the fund raise $1.2 billion in 2014 as concerns about the fund’s management and financials had begun to circulate.

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The investigation comes amid a massive overhaul of the Munich-based bank announced over the weekend, which includes layoffs in the thousands and the creation of a separate entity for bad loans, debt and other problem investments and holdings that have plagued the bank since the 2008 global financial crisis.

Investigators reportedly have been assisted by former Goldman Sachs executive, Tim Leissner, the Journal said, citing people familiar with the matter. Prosecutors have been investigating similar issues at Goldman, where Leissner, a former managing director, pleaded guilty last year to helping re-direct billions of dollars from the 1MDB fund.

A state economic-development fund, 1MDB turned into a major global scandal after billions of dollars were drained from it between 2009 and 2014, leading to multiple government investigations and the downfall of former Malaysian Prime Minister Najib Razak.

The Department of Justice has said the stolen money totals at least $4.5 billion and that it was used to pay bribes to government officials, pad a slush fund controlled by the former prime minister and purchase hundreds of millions of dollars in luxury goods and real estate.

Shares of Deutsche Bank were down 0.54% at $7.36 in early trading in New York on Thursday.

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Source: Deutsche Bank Ensnared by Billion-Dollar Malaysian Fund Scandal – Report

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