IPE, also known as International political economy, is a concept as tough as cryptocurrency itself. However, in recent times, economic experts have started associating them both with each other and rightfully so. In this article, we will ponder upon how cryptocurrency and the IPE of money are connected and all the aspects of the digital financial system that we should know about. To know more information, visit The News Spy App.
Understanding The Concept of International Political Economy
International political economy, in simple words, is the field of study that talks about the association and connection of economy with politics at the global level. It analyzes the political and economic elements which interact with each other and gives a new shape to the International Trade System and the system of globalization.
IPE, in itself, is a wide and extensive concept that includes critical and liberal approaches showcasing varied elements and schools of thought.
Approaches Of IPE
The two major Schools of thought associated with it are the liberal and critical approaches toward the economy. As far as the liberal approach goes, it talks about the influence of globalization, markets, and trading to promote the economic development and growth of States. On the other hand, the critical system inclines toward the distribution of resources in the economic system and power systems. Hence, the latter is more about the negativity associated with neo-liberalism, while the former is all about the positivity associated with inclusive trade systems.
The international political economy talks about the major issues associated with Global Finance, globalization, international trade and Development, environmental issues, and monetary policy. Being a multi-discipline approach towards finance and economy, it associates itself with a variety of subjects, including political science, international relations, sociology, economics, business management, and many others subjects.
Cryptocurrency And IPE
With the emergence of digital currency, for instance, cryptocurrency, the world economy has changed quite a lot. With more and more people trusting virtual investments and managing their assets, it has reached the international arena as well. Naturally, It has started influencing the concepts of IPE as well.
Features Of Cryptocurrency Affecting IPE
Cryptocurrency has some features that affect IPE directly. Some of them are as follows:
1. Decentralization And No Control
Compared to fiat currency, which is under the direct control of regulating authorities and financial heads; cryptocurrency doesn’t come under anyone’s control. No Central authority or government can control the cryptocurrency which makes it highly decentralized. Now, this is a massive shift from the traditional financial system working internationally. The international political economy functions on the basic idea of the Central Banks having control over the monetary policy and the sole authority to modify them.
2. Affecting The Exchange Rates
Another major way through which the international political economy works is through the usage of conversion and exchange rates. As one currency gets shifted into another one, there is a specific fee to be paid. However, as cryptocurrency has universal rates everywhere, there is no need to make any conversions. This also disrupts the traditional methods of international currencies working. Another way through which the exchange rates have affected international trade is the volatility that comes with the ever-changing values of cryptocurrencies.
3. Issues With Regulation
Yet another concern that cryptocurrency and its emerging fame have posed a threat to the International Political Economy is the problem with regulations. Despite being quite popular, cryptocurrencies have not been accepted by all countries across the globe. While some countries have given them a notion of acceptance, others have rejected them. This has caused some kind of disturbance and irregularity in the framework of the international financial system.
Cryptocurrency And International Payments
Being an alternative to traditional payments, cryptocurrencies offer the digital value of money. Despite being a new concept, it showcases its value and is considered a valuable form of payment globally. This peer-to-peer payment system has brought revolutionary changes in the financial system throughout the World. With cross-border transactions being extremely low-cost and secure, payments have become swift and efficient.
The international political economy has been quite stable since the beginning, but the emergence of cryptocurrency as a major digital currency system has affected its stability negatively. It has changed the economic system mainly because it is a decentralized process of money management, and no central authority can affect its functioning.