Governments and central banks around the world have been urged by Jeffrey Tucker who is a foremost economist and editorial director of the American Institute for Economic Research (AEIR). In what seems like a piece of advice, he encouraged them to resist the idea of establishing state-based digital currencies however tempting it might be. Instead, governments and central banks around the world should place more focus on improving and advancing the conventional system of banking.
The prominent economist reportedly stated in an AEIR publication that the skyrocketing boom in the digital currency market and the blockchain technology at large is an achievement meant to be attributed to the private industry as everything in the ledger technology seems to be decentralized. Therefore, the presence of an authoritative centralization of the government would not be a welcome development in the sector.
While further explaining why efforts to centralize a rather decentralized blockchain system by bringing it under the authoritative umbrella of the government, the economist was of the opinion that such an idea would backfire as the initiative will run against the primary purpose of why digital currency exists in the first place; which is to revolutionize the monopoly of money by the government. He explained this particular point by saying:
“I’m not a believer. They won’t compete in the marketplace. They might achieve the opposite of the stated goal – the end of monopoly. Truly rivalrous competition is just now starting to exist in a sector long monopolized by governments…Thanks to decentralized-ledger technology and some impressive innovations to create digital money and banking solutions — the technology operates peer-to-peer and requires neither government nor intermediaries to operate — we are beginning to see what real choice in currency might look like.”
Jeffrey Tucker holds the opinion that the monopoly of government over money has been responsible for constant inflation, world wars, economic depression, poverty, huge government debts and undue bureaucracy in the past decades if not centuries, but with the emergence of blockchain technology which translates to the end of monopoly, all those vices will be things of the past.
According to him, the “most exciting thing in money and finance on the planet,” is cryptocurrency, stating that the government is not invited to dine on the table of digital currency as all its effort to perhaps take advantage of the system would end in futility thereby short living the gradual progress of the system. Tucker also stated that the government should cease from rectifying perceived shortcomings of the system as it provides for variety and its failure rate is as meager as that of a small startup. He was reported to have said:
“Intervening will only result in more costly regulation and probably end up setting back the cause of genuine competition.”
The Proposed European Central Bank Coin (ECB)
Tucker did not spare the European Central Bank Coin (ECB Coin) as he condemned the initiative describing it as pointless and not feasible. State-backed digital money according to him would amount to the government bringing sand to the beach which implies solving a problem where one doesn’t necessarily exist. He, therefore, advocates for abstinence and a non-partisan approach from the government as he believes this is the only way government can contribute to the success of this fast-growing sector. Instead of reinventing, he advised government around the world to create an enabling environment for the system which will allow the technology to thrive.
While showing his keen interest in the European Financial Authority, the economist stated that suitable systemic reform is needed in its financial institution by increasing healthy competition through deregulation process and a drastic reduction in regulatory embargo placed on entry.
Also, he advocates for a reintroduction of the gold standard as opposed to the fiat system currently in operation. He opined that these would amount to more judicious use if its oversight and regulatory power instead of delving into the digital currency world.
The proposed Venezuelan state-based digital currency “The Petro” was also not spared in his criticism as it was vehemently condemned and described as “not a cryptocurrency, but rather an oil-backed debt instrument floated only to get around U.S. trade sanctions.”
Tucker stated all these forms of government-backed cryptocurrency would have no place in the crypto market as it awards coins based on the appeal made to the market, not some centralized official imposition which the government is bringing on board.
While summing up on what he feels about the inclusion of government in the blockchain industry, which has thrived perfectly well under the private sector over the years, Tucker noted that:
“When the private sector is innovating, government and central banks should leave them alone. And an even better rule: if you didn’t invent it, and you made no contribution to making it more valuable, you can’t regulate it either.”