Citizens moving savings to Bitcoin, and it's effects on national budget.

[CTO114]

Bitcoins recent discussions have been based on price, speculation and possibly decentralization.  Governments may however begin to be confronted with a question. What happens to a nations budget when citizens put a large chunk of their savings in Bitcoin?

Looking at most governments budgets, you'll realize they rely on a more traditional financial systems; where individual savings remain in banks, banks give out these deposits as loans for interests which are then taxed by the government, and ultimately the Central Bank regulates these activities through their monetary and fiscal policy.

However, when citizens decide to keep their savings in Bitcoin; Bank deposits reduce,  monetary policy is becomes less effective, tax funding reduces, and even capital is less controlled.

So you then ask, how will national budgets adapt when there's a stronger store of value in Bitcoin?

What happens to fiscal policy in an economy dominated by Bitcoin's influence?

[un_rank]

There will always be more funds going to fiat in a system that is heavily reliant on its legal tender. I cannot foresee a future where the amount of money going to bitcoin becomes a threat to the government.
There are other ways a country generates revenue beyond taxes so there is no particular risk to the national budget in this situation.

- Jay -

[(BTC)]

I think you can look at gold in same way you're looking at bitcoin, here. Gold has a significantly higher market cap than bitcoin (for now  ) and there are plenty of people out there that have their life-savings/their entire net worth in gold. The government seems fine with that and it's not reacting in the way you predict.

[legiteum]

Bitcoins recent discussions have been based on price, speculation and possibly decentralization.  Governments may however begin to be confronted with a question. What happens to a nations budget when citizens put a large chunk of their savings in Bitcoin?

No different than if citizens put a large chunk of their savings in AAPL or soybean futures or gold or silver or real estate or sports betting. Bitcoin is just another thing to invest in.

I know, I know, the Illuminati faction here wants to the answer to be, "IT WILL BRING THE USA TO ITS KNEES" or something, but... it won't. It's not that exciting .

I mean, yes, if you imagined an extremely large chunk of consumer capital being tied up in a non-productive asset like Bitcoin (or gold, or basically anything that is not a company), then I suppose the cost of capital for business expansion would increase and that would slow long-term growth, but that's pretty far-fetched.

[SilverCryptoBullet]

However, when citizens decide to keep their savings in Bitcoin; Bank deposits reduce,  monetary policy is becomes less effective, tax funding reduces, and even capital is less controlled.

So you then ask, how will national budgets adapt when there's a stronger store of value in Bitcoin?

What happens to fiscal policy in an economy dominated by Bitcoin's influence?

Do you see that together with Bitcoin and cryptocurrency adoption, governments globally have began more accepting cryptocurrencies but they also enforced more regulations on this industry with KYC, AML and tax policies that all affect their citizens. They have tried doing more regulations, enforcing more and stricter tax policies in order to milk more money from citizens and business companies in this industry.

I don't know whether you based on any reports, evidences for your statement about effects on national budget. It's hard to convince me that in many nations, governments have witnessed decreases in their nation budgets recent years and how to connect them with adoption growth of cryptocurrencies.

[Ambatman]

They are already adapting fine by implementing taxes on citizens holdings
And trying to make KYC stricter
They might even glance towards users making use of self custody wallets.

What happens to fiscal policy in an economy dominated by Bitcoin's influence?

It would have a bigger impact on monetary policy
And would affect money printer from being active
So a No
They would rather Bitcoin be seen more like Gold. Just a store of value.

[Wiwo]

Citizens' money is theirs and not for the government,, the government budget is made up of their tax generation and other national assets that generate money for the government, as long as the government is not investing their budget directly in bitcoin, it won't affect the economy and the government will just be fine with that.

Why should we worry so much about money flowing into Bitcoin when Bitcoin itself is money and could be exchanged anytime the holder wants to convert it to fiat.

[Mia Chloe]

Bitcoins recent discussions have been based on price, speculation and possibly decentralization.  Governments may however begin to be confronted with a question. What happens to a nations budget when citizens put a large chunk of their savings in Bitcoin?

When we discuss basic economics especially cash flow we actually need to focus more on practical applications not just theoretical assumptions. Basically, in terms of percentage how many people actively Hodl bitcoins especially statistically against fiat? That percentage is barely enough to alter cash dynamics.

That aside the government themselves can easily negate most of the effects because most of them are hodling bitcoins too and remember gold's relative movement to bitcoin also.

[famososMuertos]

Well, in theory, the important point you're making (even without the kind of impact on cash flow you mentioned) is precisely why this is called a financial revolution in some circles: having control over your money without depending on a third party. The real "rebellion" lies in actually putting that idea into practice.

In reality, more than the volume of those "savings" affecting banks or governments, the key issue revolves around tax oversight and the resulting tax rates, reporting requirements, bilings, and so on. That's the real dilemma for governments, since there are already other assets people can use to safeguard small amounts of value.

[Nwada001]

No country relies only on citizens' deposits and interest gotten from loaning out those deposits to run their system; it's more of an added value to the banks, and it's not having much effect on the economy in general.

If we are also to look into who is actually moving their money away from bank savings into Bitcoin, the number is quite low compared to how people are really speculating about it. Our regular bank deposits shifted to Bitcoin can't harm the economy in any way; let's be realistic about that.

[macson]

It's up to the citizens to decide where to invest their money. It's none of their business to care about the national budget, as officials are elected by the people to manage state affairs.

So, in this case, whether people choose to invest their money in Bitcoin or traditional assets is a personal financial decision that should be respected.

Moreover, in this case, the government does not rely on just one source of income because there are various other sectors that they can use to develop the national budget. Also, the percentage of people who will put their money in Bitcoin will not be that large, there will definitely be more people who still choose traditional instruments. So these concerns are unnecessary.

[Z-tight]

BTC, just like any other asset people buy and invest in is not a threat to any country's national budget. I don't know which country you're from, but you can use yours as a case study, do you believe people would buy BTC in such quantity that it becomes a threat to government, i'm sure the answer is no.

Take note that BTC is also an asset with a capped supply, and large corporations are already holding a large share of its supply. So it is not as if BTC is an asset that can infinitely be mined for everyone around the world to have a large chunk of their wealth in it. Then there ulis also another point that not everyone is interested in holding BTC.

[whiteblue]

If people move their money to Bitcoin, what might happen is that they won't be keeping their money in banks, which will lead to a liquidity shortage in banks. This will also impact the prospects for borrowing and lending at banks, such as deposits, for example. Because banks use their customers' funds to provide services, fiscal decisions will inevitably change, and this will certainly change the scale of banks' financial services.

This is because, if we consider the scale, banking will be more affected than others. Money circulation will likely also be impacted because demand or public spending will decrease when people keep most of their money in Bitcoin instead of investing it for the long term.

[Spaceman1000$]

The thing is that, people want to be financially free and financially independent  and bitcoin gives them that leverage, the government of the day have been making their budget from revenue's they make from taxations, exportation and all the rest, bitcoin is a private asset for most individuals so government cannot be drawing their budget from people's savings. In a particular country for instance everybody is not investing or saving in Bitcoin, there are sometimes few percentages of people that invest in Bitcoin however, from the spending of every other citizens, the government can collect their tax from there to help fund the budget not from the Bitcoin saving of individuals.

[stadus]

It’s hard to assume that everyone is moving their funds to Bitcoin. Maybe around 10%, or even less, are actually investing in it, while the majority are still relying on fiat.

Bitcoin is still an investment, and not everyone can afford to invest, especially during this crisis. For many people the bigger concern isn’t protecting their savings from inflation, but simply earning enough money to cover daily needs and get by.

[PrivacyG]

Maybe if the Governments have less Money, they actually fund the things they should instead of purchasing luxury for them selves, building ball rooms, funding unnecessary wars and not giving a single care about making the country Safer, better, more educated et cetera.  Most countries are conscious of the fact that their leaders are spending Money out of the budget away on things that should usually be on the end of the list of priorities.  There was a time when people did not have a Bank account and the Economy worked great.  It rather looks like the Economy is getting only worse and worse since Bank Accounts are such a common thing to own and use all the time.

[CryptoYar]

Move towards Bitcoin as main place to keep wealth is creating large test for governments because it is taking money out of normal banks and it is making main banks less able to control money system using interest rates. Governments are losing their usual way of taking tax and power to print money to pay off debt so that they have to be more careful with spending as bank money falls.
We are seeing, in my view, end of such an invisible tax through inflation so that, in order to continue paying for their spending plans, nations are now setting up new digital toll booths to watch and tax all deals at point of contact between Bitcoin and real world.

[cryptoaddictchie]

What happens to fiscal policy in an economy dominated by Bitcoin's influence?

Honestly not much of an effect. But for our country(Philippines) for this to happen? Maybe close to impossible. Since last year The govt are cracking every piece of global crypto affiliated like Banning Binance app, and probably other global cex. Not only that, the Philippines are aiming to ban Telegram due to crypto affiliations. See the effect?  For me we will not have a national budget even majority of users got savings of bitcoin instead of bank. Why? Cause our govt expertise is to find a way to have taxes even sometimes unnecesaary already.

On overall I dont think it will be affected since majority holds fiat and bitcoin or crypto as secondary for savings except to those crypto maxi and as usual investment guru or more into crypto.but the rest still holds savings via their banks.

[bitbollo]

The real amount that can reach "national" economy could be estimated in less than 1% in most of the countries.
Just to see the amount of money that has been already saved/accounted in btc/crypto... excluding few nations/companies there is not yet a real impact.
The only difference can be seen only in certain scenarios or way to store money. Its evident there is a new economy and a new industry that has start to drain (?) some resources.

[BALIK]

No different than if citizens put a large chunk of their savings in AAPL or soybean futures or gold or silver or real estate or sports betting. Bitcoin is just another thing to invest in.

Exactly. Bitcoin is just another form of investment, similar to gold, silver, or stocks. The difference is that it is newer and has more growth potential. Therefore, people pouring money into Bitcoin is essentially no different from other investment. Instead of investing in gold as they did before, some people are switching to investing in bitcoin. And if investing in gold does not pose a major concern for the national budget, then people investing in Bitcoin is not much different.