Bankitalia, Consob and crypto: there is no money without credit and savings

If banks are allowed to produce private money, why should the same not apply to crypto businesses? The reports of the Bank of Italy and Consob help remind us of the answer: as long as banks jointly ensure credit to the economy and the protection of savings, bank privilege has a macroeconomic foundation. The two pillars of credit and savings are the pole star for understanding who produces money and who does not, but also what a bank can do, or cannot do.

Both Governor Panetta's Final Considerations and President Savona's Speech to the Market addressed the issue of crypto assets, highlighting all their critical aspects, particularly if they are used as a means of payment. In the same days, on the other side of the Atlantic, in the US Senate the path continues, strongly desired by President Trump, which has as its final goal precisely that of giving the status of currency to a segment of crypto assets.

The starting point is to remember that the only private enterprises whose liabilities can serve as currency today are the banks. So the crucial question becomes: how is this banking privilege justified? The justification lies in the path that economic analysis and history, intertwined with each other, have taken so far, which can be summarised in two steps.

Firstly, a market economy is all the more efficient when there is a liability, guaranteed by the state, used to express the prices of goods and services, which is effective from three points of view: it is accepted to carry out exchanges; it maintains its value, in terms precisely of the goods and services that can be acquired and conserved with it; it does not reveal information on who uses it, without the user wanting it. Let us think of any public currency, whether in the form of the traditional banknote, or in the electronic guise that we will soon have, such as the digital euro; its fortune is linked to being simultaneously a medium of exchange, a store of value and a store of information.

Secondly, at the same time, a market economy needs enterprises that take the risk of financing investments, and at the same time adequately remunerate savings. In order to give credit to enterprises and households, they must in turn take on debt: if their liabilities take on the status of money, their production and distribution will be facilitated, provided that these liabilities are a driving force for better management of the assets that the same households and enterprises entrust to these private enterprises.