As soon as people decide that crypto is valueless, it will be – but in the next few years, exposure of traditional institutions will likely run into the hundreds of billions

As a principal adviser to the then treasurer Wayne Swan, Jim Chalmers had a ringside seat to observe the impact of the global financial crisis on the Australian economy and financial system. We were spared the initial impact of the GFC largely because, still bearing the scars of financial disasters in the 1980s and early 1990s, Australian financial institutions had been slow to embrace the exotic derivatives that brought down their counterparts in the US and UK. That delay allowed time for vigorous fiscal stimulus (here and in China, our main export market) to stave off the long and deep recessions seen elsewhere.

But a few days ago, Jim Chalmers made comments suggesting that Australia’s financial system will not be insulated from a crisis that seems all too likely to emerge in the next few years. When Donald Trump assumes his role as the US president, it will bring an end to policies that have maintained a wall of separation between the traditional financial system and the crypto sector. Chalmers, citing Trump’s moves, has suggested that Australia will follow suit.

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