International Monetary Fund (IMF)
Country : Greece
Delegate : Adriana Fatini Binti Amiza Topic : Addressing the Emergence of
Cryptocurrency
“In the same way that central banking nearly wrecked the world and created one calamity after another, bitcoin can save the world one transaction at a time.
It is time for a new beginning.”– Jeffrey Tucker
The emergence of cryptocurrency in Greece is linked to the sovereign debt crisis or as known widely, The Greek Crisis which happened in the late 2009. The Greek economy was already facing weaknesses in its structure, which is compounded with a lack of flexibility in its monetary policy as a Eurozone member when it was further hit by the Great Recession. As a result, confidence in the Greek economy dissipated. To solve this conundrum, the government implemented 12 rounds of tax increases, spending cuts and reforms from 2010 – 2016.
In 2010, 2012 and 2015, Greece had applied for bailout loans from the IMF, Eurogroup and ECB. On 30th June 2015, Greece made history as the first developed country to fail to repay an IMF loan on time.
Soon, the Greek public woke up to find the Central Bank of Greece had refused to open their doors to them. Desperate, the Greek citizens turned to the internet for a solution and found cryptocurrency. A few trading platforms such as the LateBTC and Bitcurex were bombarded with questions about locations of the Bitcoin ATMs and the legality of Bitcoin in Greece. As an evidence to its popularity, the number of Bitcoin ATMs increased from only one in 2015 to five in 2018.
In response, the Bank of Greece released several warnings in February 2018 to the consumers about the risks which come with virtual currency. The warnings, which include the possibility of losing one’s money, were based on the joint statement released by the European Banking Community (EBA), the European Insurance and Occupational Pensions Authority (EIOPA) and the European Securities and Markets Authority (ESMA). Consumers were also warned by the European Supervisory Authorities (ESAs) that there was a dangerously high risk in dabbling with virtual currencies (VC). Apart from that, there weren’t any authorities which
regulate virtual currencies, making them unfit as products for investment, savings and retirement planning.
The fact that many Greeks have bought VCs without being aware of the dangers involved began to worry the ESA. Without knowledge in currency trading, there was a risk of consumers losing their hard-earned savings due to the unstable market price of VCs. Indeed, there have been cases such as these where investors lost their investment because of the high volatility and pricing bubble. These scenarios would further compound the consumers’ financial problems and worsen their financial situation.The EU law states that it does not regulate VCs and their trading platforms. This means should anything go wrong; the closure of VCs exchanges or cyber attacks to steal the currencies are some of the possible dangers, there is practically no coverage for the investors.
As a solution, the Greek government would like to suggest a few measures such as the following:
1. Tax On Bitcoin (TOB)
Bitcoin consumers could be taxed for their investments. The amount of tax could range from 10% to 80% of the investment as bitcoins are usually valued higher which would be a non-issue with the consumers.
2. Cryptocurrency Policy (CP)
It is necessary for the Greek government to enact laws to regulate the cryptocurrency trade. Even with all the risks, cryptocurrency is fast gaining popularity among the masses, especially since the Greek Crisis began. The government should initiate discussions with all the stakeholders involved and come up with a win-win solution to protect the Greek investors from being victims of unscrupulous trading or major losses.
3. Development of Greek’s own cryptocurrency (DGC)
It is recommended for the Greek government to create its own cryptocurrency. This will help with the regulation and enforcement of laws to control the trading of VCs. The Greek’s Cryptocurrency would be use within the country widely either in businesses or daily usage. This is also would led to economy boost from a lot of investor that interested on using cryptocurrency as the investment’s median of payment.
Greece would make such a huge impact on emergence of cryptocurrency in the world if it taken seriously, this could led to Greece’s economy and currency improvement.
BIBLIOGRAPHY
Amadeo, K. (2020, May 18). Understand the Greek Debt Crisis in 5 Minutes. Retrieved October 20, 2020, from https://www.thebalance.com/what-is-the-greece-debt-crisis-3305525
Broumas, α. (2019, December 11). The Legal Framework of Virtual Currency Exchange Licensing and Operation in Greece. Retrieved October 18, 2020, from https://lawandtech.eu/2017/11/29/virtual-currency-exchange-licensing-in-greece/
Brown, J. (2019, January 22). Cryptocurrency and Greece. Retrieved October 29, 2020, from https://gardenofcrypto.com/blog/cryptocurrency-and-greece
Karpathiou, D., Antonopoulos, P., Gct, & Blogger, G. (2020, September 04). How Will Greece Be Impacted By Cryptocurrency? Retrieved October 30, 2020, from https://greekcitytimes.com/2020/09/05/how-will-greece-be-impacted-by-cryptocurrency/
Ozelli, S. (2018, July 04). Will Cryptocurrencies Preserve Their Popularity in Greece? Expert Take. Retrieved October 27, 2020, from https://cointelegraph.com/news/will- cryptocurrencies-preserve-their-popularity-in-greece-expert-take
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