In recent weeks, Donald Trump's statements targeting US Fed Chairman Jerome Powell have been causing turmoil in the financial markets. The Bank for International Settlements (BIS) has responded to these threats.
Political Risks for Central Banks
In its annual report, the BIS warns about the growing risks of political interference in the handling of interest rates. The institution emphasizes the vital role of independent monetary policy. A central bank must be able to act according to its convictions, even if this does not align with government wishes.
Impact on Cryptocurrencies and Economy
Attacks on the Fed's financial independence could affect not only the United States but also the global economy, including crypto markets. A politically dependent Fed would create a dangerous precedent, threatening the credibility of economic measures. This could strengthen the thesis of cryptocurrencies as safe assets. Conversely, a general decline in risky assets could occur if an economic crisis is triggered by a loss of confidence in the Fed. Therefore, the ability of central banks to withstand political pressure becomes particularly significant.
Final Thoughts
The BIS adopts a cautious approach to protect the global economy. Monetary independence amidst political pressure may well become one of the major geopolitical issues of 2025.
Thus, pressure on central banks may threaten financial stability both in the US and abroad, underscoring the importance of their independence.
