Putin’s War Could Make Central Banks a Crypto Battlefield
Tough times will push stablecoin adoption in Russia, just as it did in Turkey. That could further erode the powers of central banks everywhere.
Foot soldiers on the crypto frontlines.
Photographer: Angel Garcia/BloombergBefore it handed over the dubious mantle of the world’s worst-performing currency to the Russian ruble, the Turkish lira had lost 44% of its value against the dollar in one year. Its purchasing power at home also waned: Depending on whether you believe official statistics or private estimates, inflation in Turkey is anywhere between 54% to 124%. So how did the locals react? For one, the tech-savvy classes went the crypto way.
Globally, among all the currencies swapped for stablecoins — blockchain tokens that promise 1:1 convertibility into hard assets (mostly U.S. dollars) — the lira's share jumped to 26% at the end of last year, from 0.3% in January 2020, according to researchers at the Bank for International Settlements. A 26% share is highly unusual, considering that the Turkish currency makes up just 0.5% of the world’s foreign-exchange market.