This article was first post on here with title "Children's Day Musing" by Robin Xie, CCO of iSunOne
The US wrestles with a debt ceiling crisis. Treasury Secretary Yellen's "extraordinary measures" seem a fading lifeline. After marathon talks, Biden and McCarthy ink a deal to lift the debt limit and cap government spending. A history of 74 raises since 1962 of the US debt ceiling. The financial future? As unpredictable as a child's imagination.
Meanwhile, the landscape in the East is morphing. Hong Kong, once steering towards crypto restriction, now extends an inviting hand to digital finance. And today, the Hong Kong SFC paves the way for retail crypto trading. Regulatory hurdles persist, but the shift from strict prohibition to hearty acceptance is a sea change in the fiscal playbook.
As the West tussles with traditional financial crises, the East has flung open the gates to innovative digital currencies. The contrast paints a compelling picture of the evolving financial world order. Will the West step up to the digital renaissance, or will the East define the financial metamorphosis?
We've kicked off our financial drama - East vs West. Now, let's take a deep dive, shall we? The truth is buried deeper within.
Enter stage right: Fiat currency market cap (https://fiatmarketcap.com/). Glance at the leaderboard and you'll spot the Chinese Yuan (CNY) trouncing the US Dollar (USD) in terms of market cap. But hold up, isn't the US GDP of 25 trillion USD in 2022 heftier than China's 18 trillion? And doesn't China have the equivalent of a monetary straitjacket in place, limiting foreign currency exchange to a meager 50k USD per person per year? The plot thickens.
Here's a juicy subplot: The Chinese real estate boom (2000-2020). If houses were popping like corn kernels in a popcorn maker, their prices were soaring like a SpaceX rocket. As a result, many Chinese individuals find themselves asset-rich and liquidity-poor.
What's a person to do? They crave that sweet liquidity, the rush of cash, preferably in Uncle Sam's currency, or at least its trusty sidekick, the HKD. And so, our protagonists find a new pathway - exchanging their assets into a more fluid form and hunting for the almighty dollar. What is a better means than stablecoins and digital currency?
Welcome to China's not-so-secret secret, the open secret that's whispered in hushed tones: International trade and e-commerce. This surprising twist provides an exciting avenue for the Chinese populace to leap over the hurdle of foreign currency controls.
In the rollercoaster world of finance, it's not always about East vs West or new vs old. Sometimes, it's about adapting, evolving, and finding creative ways to survive and thrive. Cheers to the underdogs, the innovators, the asset-rich, cash-poor individuals who channel their “inner child” and chase financial freedom.