Beyond Investment: Everyday Use of Crypto

Moody’s noted that cryptocurrencies are no longer confined to speculative investments. They are increasingly being used for savings and cross-border transfers. This shift amplifies their impact on domestic financial systems, making their influence more significant than before.

Stablecoins and the Threat of “Crypto-ization”

One of the report’s key concerns is the growing use of dollar-backed stablecoins. By encouraging transactions and pricing in foreign currencies rather than local money, stablecoins could weaken central banks’ ability to implement effective monetary policy. Moody’s suggested this trend may erode transparency and regulatory oversight, fostering a form of unofficial dollarization — or what it called “crypto-ization.”

New Channels for Capital Flight

The report also underlined how cryptocurrencies, through anonymous wallets and offshore exchanges, provide new pathways for capital flight. Such flows may destabilize exchange rates and put additional pressure on already fragile economies.

Regional Adoption Patterns

According to Moody’s, crypto adoption is most concentrated in regions like Southeast Asia, Africa, and Latin America. The drivers include high inflation, depreciating local currencies, and limited access to traditional banking services. In contrast, advanced economies are experiencing adoption led by institutional investment, clearer regulations, and market consolidation.

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Clear Signs of Economic Slowdown

In his remarks, Kashkari clearly stated that the economy is slowing. On the other hand, he noted that the impact of tariffs on inflation is still not fully understood. Despite this uncertainty, he said it may still be appropriate to begin adjusting the policy rate in the short term.

Two Rate Cuts Still Possible This Year

Kashkari stated that two rate cuts by the end of 2025 are still a valid scenario. However, there is an important condition here: if inflation starts to rise due to tariffs, the Fed may halt these cuts or even shift to a rate hike if necessary.

“Reversing Course May Be Better Than Waiting”

Kashkari emphasized that the time may have come to reverse course in rate policy, stating, “Reversing course may be better than waiting.” This message supports expectations that the Fed could move toward a monetary easing path in the fall.

Tariffs and Inflation Uncertain, But the Data is Clear

Kashkari said, “We don’t yet know what will happen with inflation, but the data we have on the slowdown is quite clear.” This indicates that the Fed may act based on growth data, even in the face of a murky inflation outlook.

Polymarket Data: Strong Rate Cuts Expectations

Meanwhile, with only 41 days left until the FOMC meeting on September 17, 2025, market expectations are already forming. According to Polymarket data:

• A 7% chance of a 50 basis point cut is expected,

• A 75% probability of a 25 basis point cut is projected,

• A 19% likelihood suggests no change in rates.

These figures indicate that markets are largely positioning toward a rate cut scenario.

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