International mistrust of bitcoin in El Salvador 1:17
(CNN) -
El Salvador's "Bitcoin Day" didn't go all that well.
The celebrated adoption of that cryptocurrency as legal tender on Tuesday in this impoverished country was marred by street protests, technical failures and an extreme drop in the value of the controversial digital currency.
What went wrong on the first day of bitcoin in El Salvador?
"Chivo Wallet", an application that works as a digital wallet and that was created by the government, was not immediately available in the main application stores.
At the end of the day, it appeared on the Apple and Huawei platforms.
Hundreds of people demonstrated against bitcoin in various protests in the capital, the Financial Times reported.
The price of bitcoin started the day around $ 53,000 before plummeting as much as 19%, according to Coinbase data.
Since then, the cryptocurrency has recovered some losses to trade close to $ 46,270.
They incorporate bitcoin as legal currency in El Salvador 0:50
Supporters defend, but bitcoin's biggest risks will linger for long
El Salvador's President Nayib Bukele, a right-wing populist who is the proponent of the bitcoin initiative, took the dramatic price drop in stride.
"I bought the drop," Bukele joked on Twitter.
He also joined supporters of online cryptocurrencies in praising big companies like McDonald's for accepting bitcoin as payment.
Supporters argue that adopting bitcoin as legal tender will help Salvadorans avoid costly fees on remittances from abroad, which amounted to nearly $ 6 billion last year, about a quarter of GDP.
Bukele may be able to fix the initial glitches, but bitcoin's biggest risks will linger for a long time.
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The risks
El Salvador does not have its own currency, but depends on the US dollar.
Adding another currency to the list, which is prone to sudden changes in value, will further complicate the government's budget and fiscal planning.
It's also a nightmare for households and businesses, who now have to spend time and resources deciding whether to keep their funds in dollars or in bitcoin.
With cryptocurrency prices prone to swings, the stakes are high.
Another risk: adopting bitcoin as legal tender can also fuel a flourishing crime, according to the International Monetary Fund (IMF), which agreed to provide $ 389 million in emergency financing to El Salvador in April 2020.
"Without robust measures against money laundering and the fight against the financing of terrorism, cryptocurrencies can be used to launder money of illicit origin, finance terrorism and evade taxes. This could pose risks to a country's financial system, the fiscal balance, and relations with foreign countries and correspondent banks, "the IMF noted in July.
Differences between cryptocurrencies: bitcoin, dogecoin, ethereum and binance coin
More warnings from Moody's and the IMF
In general, the credit rating agencies are not impressed.
In late July, Moody's Investors Service placed El Salvador's debt in the territory of the "junk" category, citing "a deterioration in the quality of policy-making," such as the government's decision to adopt bitcoin as its currency. legal course.
Moody's said the country remains susceptible to financial shocks that could jeopardize the government's ability to pay creditors as of January 2023. That means El Salvador is likely to need another bailout from the IMF.
Other countries should follow El Salvador with extreme caution.
The IMF urged governments to use new digital forms of money only when they can preserve financial stability, efficiency and equity.
"Trying to make cryptocurrencies a national currency is an inadvisable shortcut," the IMF warned.
Chinese investors invest $ 1 billion in new BlackRock fund
BlackRock's new investment fund in China - the first owned by a foreign company - attracted $ 1 billion from Chinese investors in its first week.
The world's largest asset manager said Wednesday that the fund - which has already raised 6.68 billion yuan - was officially established this week and has attracted more than 111,000 investors.
At the end of last month, it began offering investment products to individual investors in China.
"We are very proud to have reached this milestone in our fund management business in China, and we appreciate the overwhelming support from investors," said Rachel Lord, President of BlackRock and Head of Asia Pacific.
Soros criticizes BlackRock
Recall that BlackRock's announcement comes days after the company was criticized by billionaire philanthropist George Soros for its efforts in China, calling it a "blunder."
BlackRock's new product launch came just weeks after the company recommended investors to invest in Chinese assets.
"Pouring billions of dollars into China now is a tragic mistake," Soros wrote in an opinion piece published Monday by the Wall Street Journal.
"It is likely to lose money for BlackRock's clients and, more importantly, it will harm the national security interests of (the United States) and other democracies."
Soros highlighted Xi Jinping's recent crackdown on private companies, which he sees as proof that "the regime views all Chinese companies as instruments of the one-party state."
He also referred to "a huge crisis brewing in the Chinese housing market" and Xi's efforts to redistribute wealth.
These trends, he said, "do not bode well for foreign investors."
Who has the reason?
Time will tell.
The shipping container crisis
You probably don't spend a lot of time thinking about shipping containers.
But these humble building blocks of world trade have become incredibly rare and extremely expensive during the pandemic.
Before the Bell lead author Julia Horowitz has spent the past two weeks reporting on shipping containers and how they are contributing to the global shipping crisis.
Backlogs are now looming over the holiday shopping season.
Before the coronavirus occurred, companies could rent a 6 or 12 meter box with relative ease, allowing them to move goods at low cost.
But empty boxes are still scattered across Europe and North America, while supply chain delays mean even more are needed to fulfill orders.
Here's the bottom line: A year ago, companies were paying about $ 1,920 to reserve a 12-meter steel container on a standard route between China and Europe, according to data from Drewry, a maritime research consultancy.
Now, they spend more than $ 14,000, an increase of more than 600%.
Meanwhile, the cost of buying a container has doubled.
"We're seeing record rates, especially in the spot market," said John Fossey, head of container leasing and equipment research at Drewry, referring to on-time travel booking on ocean carriers.
Container industry experts are not sure when prices will drop.
But they do agree on one thing: the situation is not going to be resolved anytime soon.
Gene Seroka, CEO of the Port of Los Angeles, has said that supply chain problems could persist until 2023.
Whats Next?
GameStop and Lululemon Athletica present their earnings reports after the close.
Also today: US job openings data at 10:00 am ET.
Tomorrow: the decision of the European Central Bank (ECB) and the applications for unemployment benefits in the United States.
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