Genius Act to give crypto a patina of governmental authority Free Banking Eichengreen 1929

The Trump administration argues that the Genius Act would take our country to a modern future. But what they seem to forget is that America had a similar banking system more than 150 years ago, and it unleashed chaos and financial ruin.

Lawmakers should think twice before passing this piece of legislation.

This proposal bears an uncanny resemblance to the way America’s monetary system functioned from the mid-1830s until the Civil War, a period known as the Free Banking Era.

In the age of social media, rumors about bank insolvencies can spread in minutes — as they did in 2023, when Silicon Valley Bank collapsed.

Wall Street Braces for the Next Silicon Valley Bank

That’s why the government stepped in and bailed out Silicon Valley’s customers, including those whose balances exceeded the normal $250,000 limit on insured deposits.

The government knew that losing those deposits might have provoked a contagious loss of confidence and a run on other banks, destabilizing the entire banking system.

The Genius Act would give hundreds — perhaps even thousands — of American companies the ability to issue their own currencies. Imagine Walmart issuing a Walmartcoin, and Amazon doing the same with an Amazoncoin, enabling them to bypass the banking system and credit card networks.

Barry Eichengreen New York Times 17 June 2025

Dr. Eichengreen is a professor of economics and political science at the University of California, Berkeley.

https://www.nytimes.com/2025/06/17/opinion/genius-act-stablecoin-crypto.html

“Private cryptocurrencies are not backed or protected by the government, and they shouldn’t be.”

Ohio Sen. Sherrod Brown, the Democratic chairman of the Senate Banking Committee, said it was appropriate for regulators to treat crypto skeptically because such currencies have been used for speculation, fraud, sanctions evasion and theft.

Pyramidspelet Bitcoin

https://englundmacro.blogspot.com/2022/11/there-doesnt-seem-to-be-anything-useful.html

Eichengreen was a senior policy advisor to the International Monetary Fund in1997 and 1998, although he has since been critical of the IMF.

Eichengreen's best known work is the book Golden Fetters: The Gold Standard and the Great Depression, 1919–1939, published by Oxford University Press in 1992.

Countries that abandoned the gold standard earlier saw their economies recover more quickly.

His recent books include Global Imbalances and the Lessons of Bretton Woods (MIT Press 2006),

The European Economy Since 1945 (Princeton University Press 2007),

Exorbitant Privilege: The Rise and Fall of the Dollar and the Future of the International Monetary System (Oxford University Press 2011),

The Populist Temptation: Economic Grievance and Political Reaction in the Modern Era (Oxford University Press 2018),[5]

and In Defense of Public Debt (Oxford University Press 2021).

His most cited paper is Bayoumi and Eichengreen "Shocking Aspects of European Monetary Unification" (1993)

which argued that the European Union was less suitable as a Single Currency Area than the United States.

https://en.wikipedia.org/wiki/Barry_Eichengreen

Copilot: Barry Eichengreen’s criticism of the International Monetary Fund (IMF) stems from his deep engagement with its policies and limitations—especially after witnessing its role during the Asian Financial Crisis of the late 1990s.

Asian financial crisis at IntCom

In his later writings, Eichengreen argued that the IMF failed to adapt to the evolving global financial landscape. Specifically, he highlighted four major shortcomings:

1. **Weak surveillance**: The IMF struggled to effectively monitor both individual countries and the global system, often missing early warning signs of crises.

2. **Outdated conditionality**: The conditions attached to IMF loans were sometimes seen as rigid or ill-suited to the specific needs of borrowing countries.

3. **Ineffective debt strategies**: The Fund’s approach to sovereign debt problems lacked flexibility and often failed to resolve underlying issues.

4. **Governance issues**: Eichengreen pointed out that the IMF’s decision-making structure didn’t adequately reflect the voices of emerging and developing economies, undermining its legitimacy.

He believed that unless these challenges were addressed, the IMF would struggle to maintain credibility and relevance in the 21st century.

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Barry Eichengreen: French and German banks have been able to sell their holdings of Greek government bonds, largely to the ECB, which has acted as bond purchaser of last resort.

15 April 2015

https://englundmacro.blogspot.com/2015/04/barry-eichengreen-french-and-german.html