- FOMC minutes and Coronavirus alert from the Fed
- Italy’s call for Covid-19 debt cancellation
- Bitcoin price drops hard
FOMC Minutes and Coronavirus Alert From the Fed
The Fed released the minutes of the Federal Open Market Committee (FOMC) meeting held on November 4-5. The minutes of the November 4-5 Federal Open Markets Committee meeting delivered little information about the ongoing world problems.
In the FOMC minutes, three themes became clear: Covid-19 is still calling the shots, the economy needs more time to recover, and the committee is seeing improvements in its bond buying program.
Referring to the impact of the pandemic on the economy, the US Central Bank made an important warning. The Fed stated that financial conditions have changed and the coronavirus poses a significant risk to the economy in the medium term. Fed officials also discussed the asset purchase program at the meeting.
Evaluating the developments in financial markets, Fed members emphasized that financial conditions have changed very little and that the pandemic poses considerable risk for the economy in the medium term.
At the meeting, policy makers decided that asset purchases provide insurance against risks that may arise in the financial markets. It was also stated that the Fed could provide more support by increasing the pace of asset purchases when appropriate.
On the other hand, many officials expressed the view that the direction of FOMC on asset purchases should be strengthened.
In order to enable the economy to recover from the Covid-19 recession, Fed leaders are determined to keep borrowing costs down. While progress has been made since the worst of the spring, some leading factors point to economic progress falling off as cases recover. That dynamic is why Fed Chair Jerome Powell’s policymakers vociferously embrace more fiscal spending.
Italy’s Call for Covid-19 Debt Cancellation
In Italy, the closest adviser to Prime Minister Conte, asked the ECB to delete debts or postpone them indefinitely.
Riccardo Fraccaro, one of Prime Minister Giuseppe Conte’s closest advisers, stated that the European Central Bank’s loans to different governments during the coronavirus crisis must be deleted or kept forever to support the recovery and reconstruction of nations. It was mentioned that ECB should help countries relaunch their economies.
In an interview he conducted in Rome, he stated that: “Monetary policy should be in a way to support the expansionary fiscal policies of the member countries.” He also added that this could include the cancellation of government bond payments received during the crisis or the permanent delay of maturities.
The European Central Bank (ECB) should consider cancelling the government debt it buys during pandemic crisis to help nations recover from the economic blow, Bloomberg reports, citing an interview of the Cabinet Undersecretary Riccardo Fraccaro, Prime Minister Giuseppe Conte’s closest aide.
Bitcoin Price Drops Hard
Bitcoin, which was very close to the record it broke in 2017, recorded a hard pullback. The coin has suffered the hardest fall since August, falling by 8.7%.
“I think this is a correction before we break $20,000,” said Ki Young Ju, CEO at analytics firm CryptoQuant.
During the pandemic period, cryptocurrencies, which increased in value rapidly due to the increased need for hedges against the dollar decline as a result of the monetary expansion of central banks, experienced a sharp correction.
Stating that the decline is not surprising, Vijay Ayyar, Head of Business Development of the crypto trading platform Luno, stated that:
“I think the peak of all times will be seen before a bigger decline / correction.”
Bitcoin prices, which have doubled this year despite the recent hard retreat, have approached the record level of $ 19,511, which was broken in 2017. Crypto fans have pointed out that individual, institutional investors and even billionaires are buying. Skeptics drew attention to the volatility in cryptocurrencies, recalling the sharp declines that took place three years ago.
Jehan Chu, Co-founder and managing partner at Hong Kong-based blockchain investment and trading firm Kenetic talked about the issue in a following way:
“The latest BTC price drop is the first of many tests for new money on whether they have the vision and stomach to truly invest in BTC and the future of digital finance, or if they’ll simply repeat 2018 and wash out of the market.”