Japan’s Finance Minister Kato States That Crypto Assets Can Enhance Portfolio Diversification

Japan’s Finance Minister Katsunobu Kato stated on Monday that cryptocurrencies can be part of a diversified investment portfolio.

“Crypto assets carry risks due to high volatility, but by establishing a suitable investment environment, they could contribute to diversified investments,” Kato remarked at an event in Tokyo.

The minister also emphasized the government’s commitment to fostering innovation without imposing excessive regulations.

Kato’s remarks are particularly significant considering Japan’s debt-to-GDP ratio has surpassed 200%, raising concerns about imminent financial repression and the potential decline of the yen.

Financial repression refers to policies designed to alleviate government debt burdens through methods such as inflation, low or negative real interest rates, currency depreciation, and capital controls.

These approaches tend to diminish returns on traditional fixed-income and cash holdings, thereby enhancing the attractiveness of alternative investments like cryptocurrencies, which offer real returns and diversification.

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