Bitcoin as a world reserve currency – how realistic is this scenario?
In Bitcoin circles it is more and more common that BTC will replace the US dollar one day.
But does digital gold really have what it takes to become a world reserve currency?
The world reserve currency plays a unique role in the global financial system. It is the currency that almost every central and commercial bank holds as a reserve. One also speaks of a “safe haven” – simply because it is the most liquid and most stable currency of all. But: Ethereum Code is not forever. The half-life of fiat currencies is shorter than some think. To be more precise, it only takes an average of a stupid 27 years for a national currency to abdicate and be replaced by another. With reserve currencies like the US dollar (USD), things are only partially better.
Because much more than 110 years has not yet been possible for the dominant form of money. The US dollar is not immune to devaluation either.
Go on, there is nothing to see here
And devaluation is the keyword. Because one thing is certain: as long as states have a monopoly on the creation of money, there will be inflation. This is not surprising; after all, the monopoly on the creation of money is one of the foundations of statehood. With good reason. Devaluation makes debt-based public finance viable. Because if the value of the national currency decreases, the real debt of the creditor also decreases – and the largest creditor in an economy is still the state itself.
The Maastricht Treatytherefore expressly provides for the independence of the European Central Bank (ECB). This is to prevent incentives according to which states prefer to turn on the printing press instead of exercising fiscal discipline. Because that is unpopular and usually leads to redistributions (falling social spending, rising taxes, etc.).
But there is such a thing as the independence of the ECB. At least since Mario Draghi’s “whatever it takes”, it should also be clear to the last proponent of state money that monetary policy, financial stability and state financing go hand in hand. What was meant was the commitment to protect the euro through unconditional asset purchase programs. In plain language, it was clear to the European tax authorities that they had (via detours) found a buyer for bonds. Quantitative easing took its course.