Radical Government could galvanize others.
When the UK crashed out of the Exchange Rate Mechanism of the European Monetary Union more than twenty-five years ago, it was agreed at the time that the reason was more technical than theoretical. Sterling simply entered at too high a rate against a dominant Deutschmark with the same being true of the Italian Lira and Spanish Peseta although other than the pound, it was only the Lira which was attacked and defeated.
Now we see a similar situation developing in Italy again with an anti-euro but more importantly anti-Brussels Government being elected in Rome. It is doubtful that were Italy to manage to successfully leave the euro, it would also leave the EU as Italy, overall, is an intrinsic part of the community. However, if Italy were to leave the single currency it could easily galvanize other countries like Greece and Spain to follow.
Any change in the makeup of the Eurozone would have significant consequences for the future role of the currency and its prospects of ever replacing the dollar as the global reserve currency. It would also damage Brussels plans for expansion of the bloc both in number and influence.
Brexit; Still the only game in town
Inflation is falling in the UK but given the recent collapse in Sterling, that could only be a temporary phenomenon. While there has been a similar level of collapse in the value of the single currency, that is being considered as positive by the ECB given the low level of inflation and the need to boost the weaker economies ability to export.
There has been great fanfare among analysts over the return to positive wage growth and the data shows that salaries are now growing faster than prices, another likely temporary phenomenon.
There is a form of madness that allows the sufferer to consider the future in a decreasing time frame, staring at, say, a year then halving to six months, then three, with an eventual feeling that as long as today is ok then so am I. That seems to be the policy of the UK Government towards its Brexit proposals, the Irish border and its ability to stay in power.
It now seems to be only a matter of time before the entire edifice collapses, but can Theresa May really perform such a 180-degree reversal of her policy that the UK will leave the customs union following Brexit simply to appease the Northern Irish MP’s who prop up her Government. We will know soon enough as the Government has promised to release its hard and fast proposals early next month.
It’s not FIAT that is changing its cash!
The UK recently introduced a new plastic ten-pound note. It is supposed to be almost indestructible (unlike the currency!) but I would question the timing of the investment in such a project. Cash is becoming less and less used. I do not have the statistics but since the lower limit for using credit and debit cards was done away with and other methods like Android pay and Apple pay were introduced, I wouldn’t be surprised if the use of cash has close to halved in the UK and probably by even more elsewhere. I read recently of a Starbucks in Tokyo where they don’t take cash anymore.
So, can a cashless society compete with the undoubted growth and acceptability of cryptocurrencies in general and Bitcoin in particular? I believe the answer to that question is yes for the next five to ten years at least.
Millennials are no different to any other generation in wanting change almost for change’s sake and see the merits of a different way of doing things, but it takes a seeming age for society to catch up. Shopping online has become regularly accepted but twenty years ago there was a multitude of questions to be answered before anyone over thirty-five would even use Amazon to buy a book.
The most pressing question is “what is more effective, evolution or revolution”? Since there is absolutely no chance of an overnight switch were Bitcoin is accepted everywhere, the answer must be evolution despite it being the nature of the young and creative generation to want to see their product in every home immediately. It just ain’t gonna happen