Question: 1.Cryptocurrencies issues and foreign exchange risk (10 marks) Part 3 considers issues and the role of cryptocurrencies in international financial markets and requires you to

1.Cryptocurrencies issues and foreign exchange risk (10 marks)

Part 3 considers issues and the role of cryptocurrencies in international financial markets and requires you to cover the following points:

  • Russia, South Korea, China and India want to ban or restrict the use of cryptocurrencies - why?
  • Do you think governments and central banks will allow cryptocurrencies to continue as we move towards electronic cash and a cashless society? What are the implications for banks and financial stability? What are banks already putting in place as competing strategies and are these likely to be more successful?
  • Contrast the advantages and disadvantages of using a widely used currency such as the USD for international transactions compared to using a cryptocurrency such as bitcoin?
  • Currency risk is a key risk in investment for MNCs when they go into new and more volatile markets, discuss how the usage of cryptocurrencies could benefit these corporations in mitigating this risk?

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