Liquidity| How It Is Key In Emerging Markets

Access to financial services has never been easier. Banking services are able to provide services on a truly global scale, yet factors like liquidity still remain elusive to many communities. This article explores the importance of liquidity in developing countries and how Freedium, through FDC token, can influence positively liquidity in emerging markets.
Commodity Backed Stable Coin
The FDC is Freedium’s solution in providing cost-effective financial services. Cryptocurrency adoption has been steadily increasing and it is not slowing down anytime soon. More people are drawn to the advantages of virtual money. However, despite the many positives, there are disadvantages which are slowing the implementation of crypto. Freedium’s solution was to back its stablecoin, the FDC, with commodities which will allow the FDC to have a stable value compared to other cryptocurrencies.
Liquidity In Production
For developing economies, this is great news. Most emerging markets are producers supplying the world with either raw materials or manufactured products. India, Brazil and most African countries are great exporters. Liquidity is essential in maintaining the level of production required for manufacturing and exporting. In as much as international currencies enter these economies, there has to be a system through which the local currency gets to the individuals and corporations involved in the actual production of raw material. Take farming for example; there are both large-scale and small-scale participants. For the small-scale farmers in emerging economies, a large percentage of them are likely to lack bank accounts. This is observed in most small-scale producers. Most of the production costs are usually covered either through cash or through mobile money transfers especially in a country like Kenya where the convenience of mobile money is experienced daily. Billions in US dollars are transacted yearly through this method which indicates its key role in production within this emerging economy. Freedium aims to bring the convenience of mobile money transfer with minimal fees to as many counties as possible.
Liquidity And Foreign Investments
Foreign investments are crucial to the growth of developing markets. However, investors need to be assured of the success of whatever they engage in. For investments to be made in public offerings and acquisition of private shares, investors have to be aware of the fragilities in the market to understand the risks involved. Having a good liquidity ratio is likely to attract investors as the market’s liquidity position indicates that it will be able to absorb any turbulence within the economy. Furthermore, investors can rest easy knowing that liquidation of their assets can be done at their own convenience which is a factor valued by investors. For investments made in stocks especially, investors need to have assurance from underwriters and market makers; this can only be provided if the markets have good liquidity.
Freedium, through FDC, creates a market where transactions can be carried out efficiently and smoothly while affording corporations and individuals access to liquidity. By focusing on backing their stable coin on commodities produced by emerging markets, they are safeguarding the interests and economy of these markets which is what investors would like to hear.
For investors putting their money in commodities produced by developing economies, FDC provides an assurance that they will always get the right value for their products. The current economic set up allows for factors such as currency value to affect the prices of commodities over time. For example, if the dollar were to depreciate, commodities trading based on the dollar would also depreciate, while appreciation of the dollar would cause appreciation in prices. This creates uncertainty in projections provided for growth and profit over a financial period, leaving businesses on uneasy foundations- an experience investor’s dread. Fortunately, the FDC ensures that the commodities maintain their value despite the prevailing conditions in the economy. Thus, investors will be more inclined to invest in emerging economies with FDC at the center.
Individuals opting to use Freedium’s ecosystem gain access to near-instantaneous liquidity as they can use their commodities to get funding via FDC through the great numbers that will have signed up for their platform. Many start-ups and established companies fail in emerging economies due to a prolonged period of poor liquidity leading them in selling their assets at substantially discounted prices to prevent extreme loss. By allowing liquidity to be obtained quickly through its ecosystem, Freedium is set to create a lifeline for struggling businesses in emerging economies and therefore actively participate in the growth of these economies.
Purchasing Power
Liquidity is also an indicator of purchasing power within the economy. Domestic demand is essential for emerging economies to outgrow their dependence on exports only. If products produced in emerging economies are also consumed within the same geographical location then factors affecting external markets are a lot less likely to have an impact on these economies. Economies relying more on domestic demand are likely to be independent compared to those relying on export demand according to The Balance. Moreover, there is a possibility that their export products may be highly valued, as their main market is the domestic market which may lead to growth on two fronts in these markets. When coupled up with the efficiency and security of Freedium, developing markets are likely to benefit greatly from its services.
Ease Of Access To Liquidity
Easy access to liquidity and credit facilities helps emerging markets grow. Freedium is going to make it possible for its users to access credit facilities easily and even liquidity based on the commodities they produce. Currently, the weak banking sector deprives producers off the opportunity to further their production by limiting credit facilities and liquidity to these parties. In the event that they award credit services, the amount given is usually a far cry away from the true value of the commodities they use as security. Such practices cripple businesses in emerging markets especially when sales fail to meet the desired targets.
Volatility in the crypto space is highly affecting ease of access to liquidity, while factors such as politics affect the value of various currencies around the world. FDC provides the ultimate solution to emerging markets. Ease of transactions, access to liquidity and the opening up of emerging economies to new markets are just some of the advantages Freedium’s platform is likely to afford these growing markets. Its improvement of liquidity will rapidly boost the confidence investors need in order to take facilitate investment in emerging markets.
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