Baker on Bitcoin, Britain and Banking (video)

Steve Baker has given an interview at the Antigua Forum on Bitcoin, Britain and Banking. The Forum is an annual gathering of market-liberal reformers from around the world. It brings together current and experienced reformers, political strategists, Nobel laureates, and others who are dedicated to reform for an intense weekend of collaboration.

The video can be streamed here.

Some quotes from the interview follow.

On the possible roads to monetary reform:

Two routes to get there. Either, go through constitutional money, so 100% reserves, then back it with a commodity, and then get rid of the central bank. Or go the other way, get rid of some of the implicit and explicit state guarantees, and then gently work towards backing it with commodities and getting rid of the central banks.

It’s not really surprising [free market economics don’t agree on banking and credit] because if it was a function of the market, it would emerge spontaneously, and nobody allows that to happen. This is why Bitcoin’s exciting.

On the impact of Bitcoin:

We shall see if people are happy to have fractional Bitcoin deposits! And at the moment it looks like they’re not. So it will be interesting to see how Bitcoin plays out.

On the Cobden Centre:

The Cobden Centre creates an international network of scholars to advance some of these ideas. Right now we’re focussed on keeping the ideas pumping out. What we want to do is move from talking about honest money to talking about free trade and peace.

On how the ideas are received.

Opposing central banks is seen as ‘radical’, but the rest of the program is seen as just principled old classical liberalism.

On the Future of Bitcoin, Steve considers the digital currency unsuitable at present: “I recently bought $30 worth of Bitcoin and in a matter of hours it had dropped 30% and then gained some value.” A currency that is so volatile in the short run isn’t useful for storing value or planning purchases. However, Steve argues that the logic of digital currencies is “unstoppable” and there should come a point in a few years time where the supply is more or less fixed and the demand is stable. At that point it will be interesting to see how people use this currency without going through the banking system. And of course, how the political authorities will react!