By
Bena Ilyas
April 19th, 2024
The BlackRock CEO opines that the Russia-Ukraine crisis could boost crypto use for international transaction settlement.
According to Larry Fink, CEO of American investment management giant BlackRock (NYSE: BLK), the Russia-Ukraine war could be a boon for crypto. Speaking on Thursday, March 24th, Fink explained that crypto could rise to become a widely-used tool for settling international transactions. In a letter to shareholders, the BlackRock chief executive noted that the Eastern European conflict will compel nations to reassess currency dependencies. Fink also stated that BlackRock was already studying digital currencies and stablecoins due to increased client interest.
Fink believes that a holistically developed digital payment system, most especially crypto and stablecoins, brings two-fold benefits. While improving the outlook of international transaction activities, it is also almost foolproof to the unsavory vices. As Fink put it:
“A global digital payment system, thoughtfully designed, can enhance the settlement of international transactions while reducing the risk of money laundering and corruption.”
BlackRock CEO’s Recent Opinion on Crypto Sings a Different Tune from Last Year
Fink’s current stance on crypto is a far cry from his opinion back in May 2021. Then, the CEO shared his misgivings, especially around the well-established volatile nature of digital currencies. He also concluded at the time that it was premature to determine whether crypto was just a speculative trading tool.
Fink suggested in the letter that the current war ended the globalization forces at work over the past three decades. Furthermore, the CEO of the world’s largest asset manager with $10 trillion in assets under management (AUM) also commented on global capital markets. In his own words, access to global capital markets was a “privilege, not a right.”
BlackRock among Those to Take Punitive Action Against Russia for Waging War on Ukraine
Fink stated that BlackRock had also taken a decision against Russia following the Ukraine invasion. The leading global asset manager suspended Russian securities purchases in the company’s active index portfolios as a punitive measure.
“Over the past few weeks, I’ve spoken to countless stakeholders, including our clients and employees, who are all looking to understand what could be done to prevent capital from being deployed to Russia. We believe this is the definition of our fiduciary duty,” Fink explained.
According to figures supplied by BlackRock this month, its total client exposure to Russia was less than $1 billion. This figure is a considerable decline from the $18 billion it recorded before the Ukraine attack.
The war in Eastern Europe has severely impacted global supply chains. Already buckling under effects caused by COVID over the past two years, the supply chain is now worse off. There are also widespread expectations of a marked increase in inflationary pressures that might force tighter monetary policies.
“While companies’ and consumers’ balance sheets are strong today, giving them more of a cushion to weather these difficulties, a large-scale reorientation of supply chains will inherently be inflationary,” explained Fink.