- European Union announced a €750 billion Euro plan for economic relief amid coronavirus.
- U.S Federal Reserve balance sheet surges past $7 trillion.
The European Commission announced plans for a €750 billion aid package to assist coronavirus economic recovery. The plan involves €500 billion in grants and €250 billion in loans.
Coronavirus has been affecting Europe significantly with the Central Bank of France implementing negative interesting rates. Negative interest rates are often the last resort option, putting COVID-19’s massive economic impact in perspective.
The European Union is not alone in responding to coronavirus’ economic fallout in a significant way. The United States initially responded to the coronavirus fallout with a $2.2 trillion aid package. Coronavirus’ impact on the US economy has led to an exponential increase in the U.S Federal Reserve balance sheet.
What Does This Mean for Cryptocurrency?
While large amounts of economic stimulus may not directly result in inflation, it certainly reignites the debate. With countries’ borrowing billions to keep the economy afloat, discussions over limited inflation assets like gold and digital currency arise. Both gold and Bitcoin have a max supply, meaning no party or entity can mint more, preventing massive inflation. Furthermore, the Bitcoin halving event, the digital asset’s inflation rate decreased from 3.6% to 1.8% per annum.
It’s likely not coincidental that both gold and cryptocurrency has seen a surge in interest since the beginning of coronavirus.
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