Bank for International Settlements: Fiscal consolidation will ultimately reduce the need to maintain high interest rates

The Bank for International Settlements (BIS) issued a warning to indebted countries on Sunday, stating that market confidence could suddenly be lost, confirming long-term concerns about the cryptocurrency market. According to some cryptocurrency experts, both Bitcoin and gold are indicators of an impending financial crisis in the United States and other developed countries. This year, these so-called zero-yield assets have risen by 48% and 13%, respectively, reportedly due to hedging needs. Although supporters of cryptocurrencies believe that BTC is the opposite of sluggish fiat currencies, this type of cryptocurrency often falls with other risky assets during stressful periods. The consensus in the cryptocurrency market is that increased debt worries will force the Federal Reserve and other central banks to cut interest rates, thereby stimulating more investors into alternative assets like Bitcoin.

The FedWatch tool from Chicago Mercantile Exchange shows traders expect two rate cuts from the Federal Reserve this year each by 25 basis points. The Bank for International Settlements added that fiscal consolidation will ultimately reduce the need for high interest rates. "For fiscal policy, consolidating finances is an absolute priority. In short term it would help alleviate inflationary pressures and reduce necessity for maintaining high interest rates which can contribute towards maintaining financial stability."