BlackRock CEO Larry Fink says the US is lagging behind in crypto development

BlackRock CEO Larry Fink said in his annual letter to investors outlining what he claims are the most pressing and rapidly changing developments in crypto and traditional finance.

The 9,000-word document, published on March 16, touches on everything from the geopolitical crisis and war in Ukraine to strategies for long-term growth and digital assets to broader trends in investment and market research.

Last year was one of the most challenging market environments in history – a year there both Stock and bond markets fell for the first time in decades – and the challenges have continued into 2023, Fink stated at the beginning of the document.

“We see opinions diverging across regions – including the US and Europe – and even within regions – particularly in the US,” he said with respect to the regulatory sector, adding that BlackRock offers over 1,300 ETFS, more than any other company.

Inflation, Fed interest rates and bank bailouts

“We don’t yet know if the fallout from easy money and regulatory changes will trickle down,” the CEO added, specifically mentioning the ongoing situation involving the U.S. regional banking sector, he predicted, “more foreclosures and closures to come.”

As inflation remains high, Fink predicts the Federal Reserve will remain focused on fighting inflation and continue to raise interest rates.

“I think inflation will persist and be harder for central bankers to tame over the long term. As a result, I think it is more likely that inflation will stay closer to 3.5% or 4% over the next few years,” Fink wrote to the investors.

In the longer term, however, Fink believes that the current banking crisis will place greater emphasis on the role of the capital markets.

“As banks potentially become more constrained in their lending, or as their customers wake up to these asset-liability mismatches, I expect that they will likely turn in greater numbers to the capital markets for funding. “

In the letter, Fink also highlighted the impact of global macroeconomic factors that shape investment. For example, he pointed out that the US government’s interest payments on the debt increased to a record $213 billion in the fourth quarter of 2022, an increase of $63 billion from the previous year. In addition, Fink noted how significant unfunded tax cuts announced in the UK resulted in a plunge in gold last autumn.

“Public and private sector managers are essentially trading off efficiency and lower costs for resilience and national security… This trade-off between price and security is one of the reasons why I think inflation will persist and be harder for central bankers to tame over the long term, » said Fink about his outlook for the coming years.

About new technology and the growth of digital assets

On the growth of digital assets, Fink spoke highly of emerging markets.

“Beyond the headlines – and the media’s obsession with Bitcoin – there are very interesting developments happening in the digital asset space.”

“In many emerging markets – such as India, Brazil and parts of Africa – we are witnessing dramatic advances in digital payments, reducing costs and promoting financial inclusion. In contrast, many developed markets, including the United States, are lagging behind in innovation, which makes the cost of payments much higher.”

Fink also added his excitement about upcoming developments stemming from computer chips and AI, predicting that North America will be a winner in advanced manufacturing where advanced hardware and software are congruently needed.

“Public policy is helping to sustain US chip manufacturing, and recent innovations in AI have become a new preoccupation,” says Fink.

Ultimately, Fink remains committed to seeing the assets and companies under management move towards important global transitions, whether in green energy, or more integrated global finance, towards the decisive changes underpinning democracies in 2023 and beyond .