Italy’s Parallel Currency That Is More Like ICO “Utility Tokens” To Be Extremely Bullish For Bitcoin
On June 11th, Deputy Prime Minister of Italy, Matteo Salvini said in a late-night TV program that Italy’s government may tax cash and other valuables that are locked in safety deposit boxes with the banks.
In response to this situation, economist and crypto trader Alex Kruger had said,
“This is bullish for bitcoin. Italy could end up being the best thing to ever happen to bitcoin.”
Italy's Deputy Prime Minister has proposed a plan to "tax" money and valuables held by citizens in their private safety deposit boxes.
Don't be surprised if more people around the world start looking for a non-censorable, non-seizable asset to store their wealth in. 🔥
— Pomp 🌪 (@APompliano) June 12, 2019
Italy Planning A Euro Exit With Its Currency Scheme
Just last week, the European Commission announced that disciplinary proceedings against Italy are warranted because it is breaking the fiscal rules over its rising public debt. This move came after the wrangling between Italy’s coalition government and the Commission over the country's pledge to increase spending and cut taxes.
Italy’s ministers are in open war with a new scheme getting floated almost every day as a means to scramble out of this maze. But one proposal that raised the hackles is the mini-BOT, an acronym for Mini Bills of Treasury.
These mini-BOTs are an instrument similar to an IOU that will allow the cash-strapped government of the third largest economy in the eurozone to pay its debts, give the citizens a way to pay their taxes and stimulate the economy.
#Italy's proposed Mini-BOTS are actually more like ICO "utility tokens" than the French Assignats were — the latter were (at least on paper) backed by lands confiscated by revolutionaries, whereas mini-BOTS aren't backed by anything. Must read thread: https://t.co/N2vqKiruCc
— Tuur Demeester (@TuurDemeester) June 13, 2019
But financial experts warn that this could create a parallel currency that will ease Italy out of the eurozone.
“It’s a first step to prepare EurExit, so I think it’s extremely dangerous,” said Riccardo Puglisi, associate professor of economics at the University of Pavia.
Either Illegal Money Or Stock Pumping Debt
So far the government has only put the idea before the Italian Parliament in a nonbinding vote but this has been enough to rattle the economist and investors.
The introduction of a parallel currency is illegal under the European law and could very well threaten to take the entire eurozone down by eroding the premise of the euro as a single monetary unit.
Mario Draghi, the president of European Central Bank (ECB) which is the only one authorized to issue money has also dismissed them.
“They are either money — and then they’re illegal — or they’re debt, and then that stock goes up. I don’t think there is a third possibility.”
The supporters of mini-BOT say it isn’t a legal tender rather just a way for the government to pay its debts which experts points out will only increase Italy’s debt.
Needs For A New Model
This has Puglisi calling out for a new money model,
“So we need a new, more equitable model for money and money production. But that money should be indefinitely politicized is, I think, truly an awful thing to contemplate.”
This crisis builds a strong argument for Bitcoin which unlike fiat currency is open, deflationary, unconfiscatable, and not controlled by anyone. While governments can create new money from debt, Bitcoin has a fixed supply.
Additionally, as we reported recently, Bitcoin has outperformed stock markets and fiat currencies during the event of crises. Now, Italy’s crisis would drive people to a safer alternative that could very well be Bitcoin.
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