For a Few Dollars More is a Sergio Leone film from 1965. A classic exponent of the most brutal, dirty and sweaty Spaghetti-Western genre ever made. It is the second installment of the ‘Dollar Trilogy’ made up of: For a Fistful of Dollars (1964) and The Good, the Bad and the Ugly (1966)
For Fabio Panetta, a member of the Executive Council of the European Central Bank, cryptocurrencies are like the ‘Indian’ in For a few dollars more: a ruthless thief who leads a gang of criminals who want to destroy the world economy. The Central Banks and the Nation States would be like Manco (Clint Eastwood) and Colonel Douglas Mortimer, the heroes of this story.
Or, at least that is what it seems and it is clear from what he said on April 25, 2022 in a speech at Columbia University.
And he said much more, in fact, his exposition should remain as one of the most complete compendiums of criticism to the world of cryptos. It seems to me that he has not left any criticism already heard by saying, with or without foundations:
- Crypto is a gold rush. Greed and lawlessness turned this promised land into the Wild West, where the few exploited the dream of the many.
- Satoshi Nakamoto aspired to realise an anarchistic utopia of a stable currency free from public scrutiny.
- Crypto enthusiasts marvel at the rise of the crypto market, with many feeling they should take their chances on the crypto gamble.
- Crypto evangelists promise heaven on earth (…) fuelling the crypto bubble.
- Satoshi Nakamoto’s dream of creating trustworthy money remains just that — a dream.
- …transfers can take hours to process.
- …are bringing about instability and insecurity.
- …are driving speculation by promising fast and high returns and exploiting regulatory loopholes that leave investors without protection
- …are not only speculative and high-risk investments, but they also raise public policy and financial stability concerns.
- …are purely speculative in nature, and hence highly volatile.
- …produce artificial scarcity to create the fear of missing out.
- …are a Ponzi scheme that can only continue as long as a growing number of investors believe that prices will continue to increase.
- …cannot facilitate payments because they are volatile.
- …are not useful as money.
- …are widely used for criminal and terrorist activities.
- …may also be used for tax evasion or to circumvent sanctions.
- …based on proof-of-work (PoW) blockchains can also cause huge amounts of pollution and damage to the environment.
- …are speculative assets that can cause major damage to society.
- …are a risk to financial stability. (1) Stress in crypto-asset markets could spill over to players in the wider financial system (2) A fall in their value might have an impact on the wealth of investors (3) A loss of faith in their value could lead to a sharp deterioration in investor confidence.
- …still comprise a small share of total global financial assets (about 1%).
- …popularity is spreading beyond their core supporters.
We must not repeat the same mistakes by waiting for the bubble to burst, and only then realising how pervasive crypto risk has become in the financial system.
Policymakers need to act and regulate [the whole thing].
We need to make coordinated efforts at the global level to bring crypto-assets into the regulatory purview. And we need to ensure that they are subject to standards in line with those applied to the financial system.
For a few cryptos more: the Wild West of crypto finance. Speech by Fabio Panetta, Member of the Executive Board of the ECB, at Columbia University. New York, 25 April 2022