The Digital Euro:
The Magic Wand for Post Brexit European Recovery
It appears that Brussels and Angela have tightened the ropes too much. With Brexit what is left is not a representation of Europe. The shining faded from the twelve stars. The agenda of super-national control has been defeated. One way or another the individual members of the EU will assert their national character and reclaim, like Great Britain, their surrendered sovereignty.
And against this fundamental setback to globalism, stands the intrinsic interest of the continent to trade freely, to enterprise jointly, to flex a combined economic muscle. The two realities will have to negotiate an optimal midway.
Looking around the win-win compromise is to be found in the brand new technology of digital money. As the Greek crisis has shown, under the EU, member countries are powerless to steer their economic destiny with the historic powerful tools of their national central bank. Greece could not devalue its currency to ease its plight, because it had no currency of its own, it traded with money minted in Brussels. It is this currency-bind which gives Angela Merkel the well-masked power to dictate what happens in Europe. It is the power behind the regulations, impositions, protocols, and dictates like the allotment of refugees per country. And it is exactly this power that member countries wish to recall. So, are we looking at two dozen currencies with daily fluctuating exchange rates? It is precisely this anomaly that motivated the establishment of the European Common Market that matured into the EU.
They did not have digital currency back then. We have now: there are protocols in place ready to digitize any combination of fiat currencies. For example, using blockchain technology the public could lightening fast trade with a digital expressions which are comprised of 50% US dollar and 50% Chinese Yuan, or these two (or more) fiat currencies in any desired proportion. This is ready technology: centralized, non-speculative digitization of a basket of national currencies, creating a de-facto trading coin with which to pay for large or small purchases, and which enjoys the flexibility inherent in diversification. This technology could be applied to a revised, less centralized EU: each member country will mint its own member-state-Euro, and will be in full control of its trade and disposition: inflate or deflate it as any country sees fit. And Brussels will mint a Digital Euro which is none other than a digitized representation of the basket of these individual currencies. The proportion of each currency in the basket is an important issue, which is been discussed in Chapter 20 (The InterMint) in The Handbook of Digital Currency (Elsevier, 2015). These relative proportions reflect the community trust in the way the respective central bank is managing its money. With these proportions fixed, the digitized basket flows frictionless throughout the continent, enabling trade, and joint enterprise much as today’s Euro does. The difference is that every country remains in full control of its currency, retains its sovereignty, and as such will have only itself to blame if things go wrong.
Today, the Euro exudes confidence on account of the EU strongest members, and the less thriving members enjoy the benefit of this confidence. But this benefit comes at a price: impotence, surrendering traditional monetary control. The Digital Euro will command similar confidence, also anchored on the more advanced states, but the cost of that shared confidence will be much lower. As technology reforms money into digital reality, the use of this technology to achieve an optimum of frictionless trade, combined economic power and an untarnished national control of one’s destiny, is the road to growth, stability and social justice.
It is this timely technology of centralized, non-speculative digital money that would provide the magic wand to be played by the rising generation of European leaders to move the continent forward.