How to save banks and the economy with the euro on blockchain

How to save banks and the economy with the euro on blockchain

By Marco Saba, September 17, 2021

 

In this article I explain how a plan to save commercial banks using the euro on blockchain could work. First, let's imagine a limited liability company based outside the EU, for example in London, which we will call "Central Euro Bank on blockchain" (BCEB Ltd). This company - which already exists - would issue euros on blockchain that it would exchange exclusively with commercial banks at par (one-to-one, one euro on blockchain against one euro bank), avoiding inflationary phenomena. In turn, the commercial bank would make this euro on blockchain available to customers, which it transfers to the customer via a dedicated wallet, for example: rapidobank.com

The customer, of course, buys through bank money that he transfers to the bank. The customer would thus have the privilege of using an innovative tool that officially would only be available to the public in 5 years. This euro on blockchain has advantages: the customer's wallet is technically an "inviolable segregated deposit", a bearer sum - the owner of the wallet - that cannot be stolen or confiscated. Should the bank go bankrupt, the deposit still remains intact available to the customer in his wallet. There are other notable advantages: the transaction cost is fixed at one cent for any amount; the transfer of the sum is immediate; the blockchain used is the most Green currently existing on the market: it consumes 175KWh against the 38GWh currently consumed by Bitcoin.

Now we come to the benefits for the commercial bank, in addition to the image one for providing an innovative service. When the bank sells euros on blockchain to the customer who pays with the bank's own bank money, it decreases the liabilities from customer debt in the balance sheet of the bank. The more euros on blockchain are sold by the banking system, the more liabilities are withdrawn from the banking system, consolidating it. In fact, while the euro on blockchain is NOT a liability of the issuer (and this is true even for the ECB's euros, which however enters false liabilities on the balance sheet to hide seigniorage profits), bank money is. But we said that previously banks had bought euros on blockchain from the ECB, and thus transferring liabilities (deposits) to the same ECB. So in the long run all the liabilities of the banking system would be in the hands of the BCEB. But the BCEB can create enough euros on blockchain to cover them - completely sterilizing the amounts and cancelling the liabilities (i.e., zeroing out the bank euro account). The BCEB can also decide to further its service by buying NPLs and other bad loans from commercial banks further improving balance sheets with a reflective policy.

Once the bank balance sheets have been saved, the country's economy can restart without delay even after this ugly pandemic period that has already had devastating deflationary effects, for example in the commercial rental property market.

At this point it is clear why the BCEB is out of the EU zone: to exercise its policy on blockchain independently of the ignoramuses sitting in Frankfurt, those who continuously create the crisis with their accounting policies contrary to commonly accepted international accounting principles.