Once again, Patrick, you have written an interesting article. And once again, I can’t make up my mind about whether you are writing wholly in support of your business interests at the same time you are making half-hearted attempts at trying to be as honest as possible.
The most striking example of the latter mystery is whether you are very deliberately pointing out that Bitcoin is a good alternative and perhaps the only one in today’s world where all the various bad-actors in the world can safely cleanse their dirty money. After all, a Swiss bank account is synonymous with money laundering. Or at best, tax evasion. It seems so strikingly clear you are making this observation and it is astonishingly rare to have someone who makes their living –in whatever way — in crypto being so honest about this issue. Well done.
As for your review of interest rate phenomena, I can’t make sense of it.
The problem is complex, but there is a set of features that characterize the phenomenon: all the countries that have issued negative-yielding debt are economically transparent, well-run democracies with low inflation rates. Countries that are able to price their debt with negative yields are therefore seen as safe havens. The likely reason that the US to date has not issued negative-yielding debt is because it has a record of having higher inflation that the Eurozone and Japan, the countries that have issued negative-yielding debt. The Eurozone does have a situation somewhat similar to Fannie and Freddie after they effectively became sovereign-backed debt. Countries like Lithuania and Czechia have been able to price their treasuries negatively since there is a perception that their debt is backed by the ECB, even though it is not formally.
As I’m sure you’re aware, a nation’s banks fund all their liabilities from their central bank by borrowing at or near the rates set on its sovereign debt and/or by purchasing the debt. They cannot offer to pay interest to banking customers and intentionally lose money or fund loans to customers at a loss.
There is therefore no “addiction” to negative rate policies of central banks. If the market is bidding up prices in a perceived safe-haven, it would be insane for a central bank not to price its debt in a way that is contrary to the demand for it. Unless you believe governments should not operate under the rigors of the market.
With that out of the way, you have to ask about the logic of using Bitcoin in place of a Swiss bank account. By law in Switzerland and Lichtenstein, no bank account owned by a non-Swiss national is allowed to pay interest. A non-Swiss national could use the services of the bank to invest and these fees and commissions is where the really big money was made, if it was made. If Bitcoin never lost value relative to the given currency the account was kept in and paid interest, then that would equate to the old-fashioned Swiss bank account. However, we all know this is not the case. A person using a Swiss or Lichtenstein bank account could ask that all her money be invested in US treasuries. Or some other debt instrument, equity, commodity all dependent on the desired risk/reward profiles.
What really is the differentiator of Bitcoin? Well, it simply is easier to move large amounts of money undetected rather than bails of cash, blood diamonds or other valuable. Converting ill-gotten gains into something that can be stashed in a Swiss bank account has always been a challenging, fraught, and expensive step. Bitcoin’s being accepted into Swiss bank accounts will vastly enhance the ability to move dirty money and thereby enhance the economies of resource, wildlife and other plunder.
Is this a good thing, Patrick?
