In a recent announcement which has shaken the European Union, Italy’s ruling populist party has threatened to seize the gold reserves of the Italian Central Bank.
According to ZeroHedge, the move is primarily the party’s response to the massive losses suffered by prominent investors after the failure of a number of Italian banks in recent years.
Currently valued at approximately $102 billion, the central bank’s gold reserves would be seized by the government away from the private banks that currently control the central bank. This would effectively hobble the central bank, moving those needed reserves into control by populist policies. According to central bank officials,
“Gold is part of the assets of the Bank of Italy and can’t be used for monetary financing of the Treasury. This looks like revolutionary appropriation.”
The populist group (the ‘5 Star Movement’) is not alone in its desire to see the reserves returned to the people. The rightwing party (the ‘Brothers of Italy’) has also joined in the call for moving the reserves into public hands. According to Giorgia Meloni, leader of the Brothers of Italy,
“The gold belongs to the Italians, not to the bankers.We are ready to battle everywhere in Italy and to bring Italians to the streets if necessary.”
However, while the populist party is pressing for full nationalization of the central bank, the response from the right wing groups (including the right-wing majority party ‘League’) has been less favorable. The main goal for these groups is covering the losses for smaller investors due to banking failures. According to the League’s leader, Minister Matteo Salvini,
“If you are here with your current account in the red, it’s because the people who were supposed to control things didn’t do so.”
National or Nationalized
The nationalization of the central bank would certainly have massive effects on the economy of Italy. It’s no wonder that the European Central Bank had just recently issued cryptic warnings regarding the legality of such seizures.
“The ECB shall approve both the operations in foreign reserve assets remaining with the NCBs (national central banks)…and Member States’ transactions with their foreign exchange working balances above a certain threshold. The purpose of this competence is to ensure consistency with the exchange rate and monetary policy of the Union.”
The actual impact, however, can be difficult to ascertain. While the current Italian monetary policy has led to the failure of a number of banks, nationalization may not be the solution. This would simply move the gold reserves into the hands of the ruling populists, allowing them to spend those funds on its biased social policies, and further crippling the Italian banking structure.
The entire series of events only serves to highlight the dangers of centralization. Whether owned by private or public entities, centralized banking institutions are concerning. They provide a platform for fiscal oligarchy in which the few rule over the many.
Bitcoin (BTC), on the contrary, provides fiscal autonomy. While still trackable and taxable, Bitcoin removes the capricious authority of the few, returning it to the hands of those who are actually harmed — the people. While the goal of the seizure in Italy may be noble, the methodology is not.
Do you think Bitcoin is a solution to the centralized problems facing national currencies, or is it giving too much individual autonomy? Let us know your thoughts in the comments below!