The Bruges Group spearheaded the intellectual battle to win a vote to leave the European Union and, above all, against the emergence of a centralised EU state.

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Bruges Group Blog

Spearheading the intellectual battle against the EU. And for new thinking in international affairs.

The Euro Versus Cryptocurrencies

The dream of the European Union to merge the military, economies and trade has apparently stalled in Eastern Europe. Indeed a closer examination of Eastern Europe shows that the majority of countries that were under Soviet occupation, throughout the Cold War, have failed to adopt the Euro as their currency. Czechia does not have the Euro. Neither does Hungary nor Romania. In actual fact the total population of countries in Eastern Europe that actually have the Euro is less than 15 million. As they currently stand these countries should adopt the Euro at some point in the future unless of course cryptocurrencies overwhelm the domestic markets.


On 1 January 1999 Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain all began to use the Euro in place of their previous domestic currencies. Beyond these states, the Euro is to be adopted by other states in the future. However, if Czechia is an example of whether or not the Euro will be adopted, a recent poll put 70% in opposition to adopting the currency.i Whereas its neighbour Slovakia, another member of the Visegard Group (V4) has adopted the Euro, Czechia has still not adopted the EU currency. Perhaps this is down to the fact that the other members of the V4, Hungary and Poland are also shy of committing to adoption of the Euro. What EU economists have failed to realize is that these countries have rich and vibrant cultures that do not want their national identities imposed upon by adopting the Euro. The founding member states of the Euro includes a high percentage of those that have already received bailouts from the ECB.


Like the IMF, it has been argued elsewhere, contributed to the debt of Greece, the ECB insisted during the 2008 recession that the Irish government repay bonds when the banks were private.ii Many questions must therefore be raised about the impact such financial institutions have on democratically elected institutions across the European Union. The premise of the Euro is a simple one. Make spending easier by having every country with the same currency. However, real world economics is not that simple. Such is the case that Bitcoin, Ethereum, Litecoin and other cryptocurrencies have come to the fore in recent years.


The reason that cryptocurrencies are so successful is down to their usability. In an age where a mobile phone that is 2 years old is out of date, it appears that the central financial institutions in the EU have failed to grasp that contactless exchanges in shops and banks have created the means by which customers want fast and cheap transactions. Cryptocurrencies allow for these styles of transactions and their popularity parallels the popularity of new technologies. It could arguably be a real game changer for the Euro unless a digital version of that is forthcoming soon.


For the foreseeable future the banks of France and Germany and the other Eurozone countries need not be too concerned. However, like the businesses that circumvented regulation in Argentina and began to thrive as a result, cryptocurrencies provide a means of bypassing certain financial hurdles for both the individual and establishments anywhere in the world. The transaction is instant. It can move from Japan to Jordan relatively easily. Such exchanges replace BACS and Swift transactions that were and continue to be heavily regulated. Needless to say, the disadvantage of cryptocurrencies may be that such a new system is widely open to abuse. However, the existing banking system has been abused for years to put money offshore for individuals, businesses and even councils to avoid paying tax. The Eurozone could shout foul play, but if so then so could those who face 12-20% tax when other countries face 2% or less.


There is no means by which the Eurozone can control the spread of cryptocurrencies and so it could arguably be said that the Euro is doomed to fail as a physical versus a digital construct. The cryptocurrencies for now have the upper hand and will continue to do so for as long as the digital realm exists. It is perhaps ironic that Reuters systems and other digital systems used by traders and bankers are possibly going to herald the demise of currencies like the Euro that are unable to compete on a level playing field.

ihttps://panampost.com/david-unsworth/2017/08/01/czech-republic-unlikely-adopt-euro/
iihttps://www.wsj.com/articles/ecb-contributed-to-irelands-huge-bailout-cost-report-finds-1453915122

Brexit Negotiations
Sebastian Kurz: Friend of the Visegard Group (V4)
 

Comments 6

Guest - Yacine on Sunday, 24 December 2017 12:26

Hi James,
Thanks for writing about cryptocurrency. Just want to share this comment from Belgium's national bank director about cryptocurrency
“It’s not stable like the euro,” said Smets, adding “creating blockchain-based digital cash could diminish our limitation to drop interest rates below zero.”

Best

Hi James, Thanks for writing about cryptocurrency. Just want to share this comment from Belgium's national bank director about cryptocurrency “It’s not stable like the euro,” said Smets, adding “creating blockchain-based digital cash could diminish our limitation to drop interest rates below zero.” Best
James Coghlan on Sunday, 24 December 2017 12:40

Indeed. Cryptocurrencies are in their infancy and that does increase risk, BUT they are akin to gold in that they are fewer and so as can be seen from Bitcoin go from relatively low price to much higher. Take for example price of Bitcoin today. IMF and ECB are all pushing Euro but the important point is that the Eastern European block by majority have yet to adopt it. Why? Well, obviously they do not wish to have it for a variety of reasons. Belgium obviously wish to promote the Euro. Yet, they cannot convince existing Eu member states.

Indeed. Cryptocurrencies are in their infancy and that does increase risk, BUT they are akin to gold in that they are fewer and so as can be seen from Bitcoin go from relatively low price to much higher. Take for example price of Bitcoin today. IMF and ECB are all pushing Euro but the important point is that the Eastern European block by majority have yet to adopt it. Why? Well, obviously they do not wish to have it for a variety of reasons. Belgium obviously wish to promote the Euro. Yet, they cannot convince existing Eu member states.
Guest - Yacine on Sunday, 24 December 2017 19:03
Reference for the above quotation... https://www.ccn.com/cryptocurrency-market-rebounds-within-24-hours-ethereum-bitcoin-cash-litecoin-rally/ Thanks James
James Coghlan on Sunday, 24 December 2017 19:39

As I said CC are the future. If you think about it, people make transactions in the West that are contactless. So, they want quick and cheap transactions. Euro is old school and EU govt has yet to get to grips with the challenges it now faces against the rise of these new currencies. Adapt or die. Which do you think they will do?

As I said CC are the future. If you think about it, people make transactions in the West that are contactless. So, they want quick and cheap transactions. Euro is old school and EU govt has yet to get to grips with the challenges it now faces against the rise of these new currencies. Adapt or die. Which do you think they will do?
James Coghlan on Sunday, 24 December 2017 19:40

I referenced all my sources. The rest is my own work.

I referenced all my sources. The rest is my own work.
Guest - Yacine on Monday, 25 December 2017 23:02

Crypto is related to the internet,and the internet is not going to last for the next ten years...so the old EU will not adapt for CC..
Yes , I know your academic excellence...
Looking forward to read your new articles

Crypto is related to the internet,and the internet is not going to last for the next ten years...so the old EU will not adapt for CC.. Yes , I know your academic excellence... Looking forward to read your new articles
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Sunday, 22 April 2018