Insight Weekly: Crypto Growth; Green Bond Market Outlook; Coal investor windfall

Today is Tuesday, May 10, 2022, and here is your weekly pick of essential intelligence on the financial markets and global economy from S&P Global Market Intelligence. Sign up to be notified of each new Insight Weekly.

In this edition, we focus on the cryptocurrency sector. Nearly 100 countries are exploring central bank digital currencies pegged to their national fiat money, according to the IMF. In the US, advocates say that investing in cryptocurrencies can offer equal opportunities to groups of people who have historically experienced discrimination when accessing legacy banking systems. In Latin America, people are turning to cryptocurrencies and decentralized finance for their basic forex needs amid capital controls, rampant inflation, and weakened currencies. As cryptocurrency adoption spreads globally, regulators are taking a closer look at the sector and its risks to broader financial stability. The sector is also grappling with environmental issues as the energy demand for crypto mining continues to rise.

Global green bond issuance fell 34.63% year-on-year to $83.8 billion in the first quarter, according to the Climate Bonds Initiative. The weak quarter ended a multi-year growth streak for the global green bond market, which was buoyed by net-zero commitments from many countries. But as most central banks raise interest rates to rein in inflationary pressures, funding costs for green bond issuers are rising and creating uncertainty for investors, according to analysts.

Tight coal supplies and rising demand have pushed up prices, allowing US coal producers to turn a profit after many faced bankruptcy and heavy debt in recent years. And with US coal consumption on a long-term path of decline, coal companies are not investing in new production, but instead are returning much of their windfall profits to shareholders. With coal company share prices rising as much as 986.2% in a year, some investors may now also reap the rewards of betting on the sector.

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