Donald Trump says he has big plans for cryptocurrencies, including the creation of a strategic bitcoin reserve and the strengthening of mining in America: in his opinion, it is a question of global primacy. But Paolo Savona, president of Consob, thinks that cryptocurrencies are an attack on the monetary sovereignty of states
After an initial phase of distrust if not hostility – he considered them “a scam against the US dollar” – the president-elect of the United States, Donald Trump, fell in love with cryptocurrencies. And during the electoral campaign that ended with the vote on November 5, he promised many things: for example, he said that America must become the crypto-capital of the world, he proposed the creation of a strategic reserve of bitcoin (the most important cryptocurrency ) and called for national capacity building mining (i.e. the generation of currency through computers with high computing power).
TRUMP’S THOUGHT ON CRYPTOCURRENCIES
Trump thinks the United States must become the world’s cryptocurrency superpower because “if we don’t do it, China and others will.” According to him, bitcoins are like “the steel industry of a hundred years ago”, that is, a strategic sector, and one day they could surpass the market capitalization of gold, a traditional safe-haven asset and for a long time the basis of monetary system.
Among other things, Trump guaranteed that there will never be a central bank digital currency, like the European digital euro project. Cryptocurrencies, in fact, are something else: they are based on a cryptography technology called blockchain but are not regulated by central authorities, such as governments or banks.
The president-elect also promised that he will fire the chairman of the Securities Exchange Commission, Gary Gensler, on the first day of his second term. An announcement that was well received by crypto-communitygiven that Gensler is in favor of adopting more stringent regulation on cryptocurrencies.
THE OPPOSITE THOUGHT OF SAVONA (CONSOB)
Paolo Savona, economist and president of Consob (the Italian equivalent of the SEC), has long had a view on cryptocurrencies that is practically opposite to that of Donald Trump. In fact, if Trump says he believes that the crypto will strengthen the global power of the United States, Savona – in an article published on Milan Finance – wrote that “the creation and circulation of cryptocurrencies reduces the monetary sovereignty of states”, as they are not regulated by central authorities. A few years ago he declared that “money can only be public, i.e. issued by sovereign states”.
Savona also thinks that cryptocurrencies alter “the distribution of income, enriching the purchasing power of the few able to ‘mine’ them from a computer and comparatively impoverishing that of those who struggle to obtain it by producing wealth with their work”.
SAVONA CRITICIZES TRUMP
Continuing his attack on cryptocurrencies, the Consob president writes that bitcoin “has the substance of a fake”, after which he goes on to directly criticize Trump’s vision.
“Trump”, we read in the entry above Mf,” he apparently went so far as to declare that he would legitimize them[ibitcoin[ibitcoinndr]as the official reserve of the dollar, reintroducing the vice of the Bretton Woods monetary agreement of the scarcity of gold, given that only 21 million pieces of bitcoin can be minted; the vice would be even worse because the price would explode, triggering Gresham’s Law, driving fiat money out of the market.”
“The hidden idea” of the president-elect, he continues, “is not to limit himself to bitcoins, but to consider other cryptocurrencies equivalent, with the negative consequence of undermining the global supremacy of the dollar, altering the geopolitical balance between alternative government regimes. The monetary theory and practice that we have been taught requires to be deeply re-examined, especially if we want to avoid crises of ungovernable proportions.”
WHAT TO DO WITH CRYPTOCURRENCIES, ACCORDING TO SAVONA
In 2022, speaking at the Trento Festival of Economics, Savona said that cryptocurrencies “given their price variability and the absence of regulation, they are peculiar reserves of value but are not real units of measurement, because their expression refers mainly to the US dollar, which remains the dominant numeraire also at a global level. Furthermore, they are not a legal means of exchange or release of debts, as they are not legal tender”.
As for the possible replacement of cryptocurrencies with central bank digital currencies, such an approach “would give rise to problems of reorganization of the current banking regime, as deposits would exit the monetary circuit. This change would limit the activity of banks in the financial circuit, that of the mere management of savings and payments, raising problems of defining common governance rules”.
Savona concluded his speech by explaining that “the current regulation still represents the basis for ensuring the proper functioning of the market for every type of activity in which the cryptocurrency are present, that it is supervised by specialized bodies capable of guaranteeing compliance with the regulations that will be decided, the transparency of the operations carried out on the market, the rapid execution of the authorization processes and sanctioning mechanisms, all activities to be examined in the new technological context ”.
