Tiff Macklem sounds the alarm: Bitcoin, the lifeboat of a dying fiat system

Tiff Macklem, current governor of the Bank of Canada, rings the death knell for traditional finance (TradFi), predicting its imminent end. He proposes a surprising alternative: bitcoin. Details!

The Bank of Canada warns: risk of “severe correction” and “systemic stress”

Tiff Macklem differs from Robert Kiyosaki and Arthur Hayes on one point: while the latter two announce the imminent collapse of the dollar and advocate for bitcoin, the governor of the Bank of Canada sees the entire fiat system on the brink.

BREAKING: Tiff Macklem, Govenor of the central bank of #Canada, has issued a warning about financial collapse of the fiat system 🚨

Better be long #Bitcoin and short fiat. pic.twitter.com/sHB5k1BT21

— Carl ₿ MENGER ⚡️🇸🇻 (@CarlBMenger) May 13, 2024

Tiff Macklem, governor of the Bank of Canada, sounded the alarm during the release of the Financial Stability Report. While praising the robustness of Canada’s financial system, he warned of the persistent risks that could trigger a “severe correction” of markets, generating widespread financial stress.

According to Macklem, some warning signs are already visible: “The valuations of some financial assets appear to have become stretched, increasing the risk of a severe correction.”

He particularly highlighted the increasing use of leverage in the non-bank financial sector, a factor that could exacerbate the consequences of a market correction, highlights Bitcoin.com.

Carolyn Rogers, Senior Deputy Governor of the Bank of Canada, stated that the increase in leverage is not yet a problem but could become one in case of a rush to liquidity.

The Bank of Canada’s annual report also highlighted a significant increase in leverage usage in the Canadian bond and repo markets by hedge funds. This is driven by arbitrage strategies related to the timing and magnitude of interest rate cuts.

The Bank of Canada rejects the idea of a Bitcoin threat to its national currency

Tiff Macklem, governor of the Bank of Canada, recently stated that Bitcoin does not pose an immediate threat to the national currency, and may never become one.

He emphasized that predictions about the end of fiat currency are recurring: “Cash has been remarkably durable, even with the introduction of credit and debit cards and contactless payments. If you look at the growth of liquidity in the economy, it has increased roughly in line with the growth of nominal income,” as noted in the columns of Finance Magnates.

However, widespread adoption of Bitcoin (BTC) could disrupt the functioning of banks, their ability to regulate the money supply, and maintain financial stability.

However, Macklem admitted that blockchain technology could offer advantages, particularly in international payments: “There are some applications of a type of global currency that could be very useful, for example remittances, which can be quite costly.”

These comments come after the uncertainty surrounding the future of Mintchip, the Royal Canadian Mint’s cryptocurrency, after more than two years of development.

Although Canada and the United States share a similar attitude towards cryptocurrencies, Canada seems to take a stricter stance. This difference could be explained by Canada’s financial stability, which was not as affected by the 2008 financial crisis as its American neighbor.