Recent narratives have painted Bitcoin in a way that it can be seen as a hedge for global economic upheaval. The US and China have been brewing a trade war while the European Central Bank has made a few dovish turns, and people have quickly looked to Bitcoin. However, in India, and even Hong Kong, things are getting direr.
Banks have never really endured themselves in recent times; 2008’s financial collapse saw many people lose faith in the traditional financial system, and it even was the catalyst for the creation of Bitcoin. Now, as banks in India start to show signs of cracking, Bitcoin looks more and more attractive for those indentured by the banks.
Reports out of India have shown people outside of branches, crying, as the banks have stopped functioning following the unearthing of crooked practices.
The Punjab Maharashtra Co-operative Bank (PMC) was caught cooking the books and misreporting non-performing loans Mumbai-based real estate developer Housing Development and Infrastructure Ltd. This led to the PMC hiding the bad loans with 21,000 fictitious accounts, which has spooked depositors, investors, and government officials.
For customers of PMC, thousands have been locked out of their accounts, and the access to their money has been cut off with the worst being feared – that the bank has failed and taken its customer’s money with it.
Nearly 900,000 depositors have been informed that capital controls are being placed on their accounts for six months, which allows them only to withdraw $100.
Similar problems are being seen in Hong Kong, which continues to be ravaged by conflict between government officials and protestors. It is being reported that ATMs have run out of money, leaving people queuing to try and get access to funds.
These fears are causing bank runs across the nation, and in defiance of this, the governance of Hong Kong is attempting to fight back as now Carrie Lam, Chief Executive of Hong Kong, can officially confiscate bank accounts and assets without recourse, according to reports.
While these banking ecosystems battle to stay afloat and relevant, other failed economies such as Zimbabwe and Venezuela paint a picture of what could be coming, and how Bitcoin can at least help offer financial autonomy to citizens.
However, a big issue for India, should this banking collapse domino out of control, is the government’s crackdown on cryptocurrency in the nation has made it extremely hard to use and to get one’s hands on.
India’s central bank has clamped down on cryptocurrency-related businesses, and while it remains that Bitcoin and others are not illegal, they are certainly frowned upon and difficult to operate within the country.
It seems a direct slight on the citizens of India that the banks cannot operate well enough to protect their money, and the government has done all it can to close the gate on a decentralized and autonomous financial system that could truly operate as a hedge in this instance.