I shared a post on social media last week, involving my concerns about potential complications that may arise if the Fed decides to expand its balance sheet. When we look at the Fed’s analytical balance sheet, it can tell us that the Fed expanded its balance sheet to more than $100 Billion since June. But, it means what?
In fact, this situation shows that the Fed has not just cut rates, but it has also provided cash to some institutions like the Federal Reserve Bank of New York, that has been having liquidity issues, and also pumped money into markets. Having injected an amount of cash almost equal to Turkey’s foreign currency reserves alone in just a couple of months, the Fed is actually taking firm steps against global risks. I must, however, tell you that it’s too early to talk about an “abundance of money” without easing funding squeeze in the United States.
Now, let’s take a quick look at the situation in Turkey: People seem to be confused by some recent statements from the Banks Association of Turkey (TBB) and then the Banking Regulation and Supervision Authority (BDDK) about the non-performing loans, upon which I felt the need to look at the situation in our counterparts regarding non-performing loans. In Bank Nonperforming Loans to Total Gross Loans Ratio, Turkey ranks third among Russia, India, South Africa, Brazil, Indonesia and Mexico. Russia, on the other hand, ranks first with a ratio above 10%. India ranks second while Turkey ranks third, with ratios around 9% and %6.3 respectively. With South Africa that sits in fourth place, ratios vary approximately from 4% to 2%, which means Russia, India and Turkey’s non-performing loans ratio remains at a very high level.
“We trust and invest…”
People seem to show more and more interest in cryptocurrencies while they keep questioning money-loan system controlled by Central Banks and other regulatory authorities. According to a new survey conducted by Statista, 1000 randomly selected people were asked the following question: “Have you ever used or had cryptocurrency?” Here are the results:
To this question which was 1000 randomly chosen people, mostly Turks answered “yes”, with 20 percent. In this grading, Turkey is followed by Brazil, Argentina, South Africa, Mexico and Chile. Spain ranks somewhere in the middle with a “yes” percentage of 10% while the United States, UK, France, Germany and Japan are placed near the bottom with percentages around 3% to 6%.
So, I think I would not be wrong in saying that demand for cryptocurrencies is running neck and neck with distrust in the financial system. I really don’t think the rise of cryptocurrency is a not a mere coincidence, an adventure of venturesome souls. We shall see how circumstances will change if the Fed decides to expand the money supply again.