Daily Management Review

BlackRock's CEO Fink Believes Digital Currency Adoption Will Accelerate Due To Russia-Ukraine Crisis


BlackRock's CEO Fink Believes Digital Currency Adoption Will Accelerate Due To Russia-Ukraine Crisis
Larry Fink, the CEO of BlackRock Inc., said on Thursday that the Russia-Ukraine crisis could hasten the adoption of digital currencies as a means of settling international transactions, as the conflict upends the last three decades' globalisation drive.
Fink wrote to the world's largest asset manager's shareholders, saying that the war will force governments to rethink their currency reliance, and that BlackRock was looking into digital currencies and stablecoins due to rising customer demand.
"A global digital payment system, thoughtfully designed, can enhance the settlement of international transactions while reducing the risk of money laundering and corruption", he said.
Fink expressed alarm about volatility in May of last year, saying it was too early to assess whether cryptocurrencies were just a speculative trading tool. find out more
The chairman and CEO of the $10 trillion asset management wrote on Thursday that the Russia-Ukraine crisis had put an end to the globalisation forces that had been at work for the previous 30 years.
He said that access to global financial markets was a "luxury, not a right," and that following Moscow's invasion of Ukraine, BlackRock has banned the purchase of any Russian equities in its active index portfolios.
"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 said.
According to numbers provided by BlackRock Inc this month, the asset manager's entire client exposure to Russia has dropped to less than $1 billion from $18 billion before Moscow's invasion of Ukraine prompted Western sanctions and the shutdown of the Russian stock market. find out more
Russia's military action in Ukraine is referred to by Moscow as a "special operation."
The impact of the conflict on global supply chains, which have already been battered by the coronavirus epidemic over the past two years, is projected to add to inflationary pressures, prompting global central banks to tighten monetary policies and reverse COVID-19-driven accommodating measures.
"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," said Fink.
He said central banks were presented with a choice they hadn't faced in decades: either live with rising inflation or limit economic growth to keep pricing pressures in check.
Energy costs have risen as a result of the sanctions imposed on Russia, which have caused corporations and governments to rethink their supply chains and strive to lessen their reliance on Russian commodities.
"Energy security has joined the energy transition as a top global priority," Fink said.