Doomsday scenarios are not very popular for an obvious reason, but now and then, it is important to consider what would happen if push came to shove. Bank of England posted their doomsday scenario, to reveal how UK banks would deal with a massive economic shock. While it is important to keep in mind most of these events will most likely not happen anytime soon, it gives valuable insights as to why Bitcoin is so important.
Also read: Bitcoin Heist: The Full Length Crypto-Themed Film
The Bank of England Doomsday Scenario
Depending on who you pose the question to, banks will either be around for a very long time, or for a handful of years. This has lead to a scenario drafted by the Bank of England to see what would – most likely- happen if the world of finance would see another major shock or disruption.
Some of the points raised in this doomsday scenario are not that unrealistic. Over the past few months, the Chinese economy has undergone some changes, and even though the country is still on target with its growth, a slump could prove to be fatal to some major banks. It would take a major disruption to slow down the growth to catastrophic levels, but the world of finance is very unpredictable since the crisis of 2008.
China is not the only concern for Bank of England and their doomsday scenario, though. Deflation in the UK and across Europe leads to weaker world trade and commodity prices. As the Euro has been struggling for quite some time now to keep its value, further deflation could push the EUR value to new lows in the not-so-distant future.
While a declining oil price sounds like music to the ears of consumers, it’s not healthy for the global economy at all. Prices are currently sitting around the US$40 mark per barrel, whereas oil used to be in the US$120-150 price range for quite some time. For countries relying on oil export, falling prices are anything but good news.
But perhaps the biggest threat comes from the US, where the US Dollar is on a rampage at the moment. At this rate, the US Dollar will reach parity with the Euro before Christmas 2015, and there is no end in sight for the value increase. The economy in the United States has recovered relatively well, and interest rates may – finally – be raised.
Bitcoin Is The Solution
Regardless of how anyone wants to look at it, the squabble between different local fiat currencies is destabilizing the global economy. If financial experts truly want to create a stable economic level all over the world, we will need to transition to a global currency. Right now, Bitcoin is the only suitable candidate, as it works the same in every country and has no central oversight.
However, it is that lack of oversight that makes Bitcoin less appealing to financial experts all over the world. In the end, it won’t matter how they feel about Bitcoin, as the digital currency is becoming more popular every month. For now, all of these currencies peacefully co-exist, but times are changing rapidly.
What are your thoughts on this doomsday scenario by Bank of England? How realistic is this concept? Let us know in the comments below!
Source: CNN Money
Images courtesy of Bank of England, Shutterstock