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

[OsaiEmma]

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?

Bitcoin isn't meant to replace fiat, but rather exist side by side with it, so the probability of this happening is very low, I know so many Bitcoin enthusiast wants it so, but it won't , now that the IMF has discouraged countries from making Bitcoin a legal tender, and so many countries are connected to the IMF and are really following their policies.

Even if everyone decided to only accept Bitcoin as a means for exchange of goods and services, the government will fight to make sure it never happens, the government will hardly allow anything to exist that will disrupt their operations, so many powerful men in the world have their wealth in fiat, so making Bitcoin more valuable and useful than fiat by putting all your savings in it, and accepting or sending only Bitcoin by most of the citizens, in such a way the government cannot tax it is almost impossible.

[X-ray]

I usually imagine bitcoin as like the advent of another form of gold or silver, the market will adapt to that eventually and so does the government's national budget across the world.

Just let it play out and everything will be fine and I'm sure there is countermeasure against that in place.

[Aanuoluwatofunmi]

We should care less about the national budget because the government are in control of this aspects, instead, this is more of our own intention on how to make use of a decentralized economy and handle our finances by ourselves, make an every moves and decision to invest and go for Bitcoin, also in knowing the possible expectation in the future about our decision today with how we secure our assets in a profitable investment, because all these the opportunity rendered when we take decision and Wear able to stand independent, as government will always find their way through every financial plan they ought to handle accordingly.

[Chinesebaby]

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?

Maybe in other to meet up with the demands, government might literally just wish to increase the bank transactions fees, since majority of its citizens aren't keeping their money in banks, where subsequent charges can be deducted at certain interval of time. Because the truth of the fact here is that, no matter how a person keeps his/she money in Bitcoin, when the need arises for such individual to make payment with fiat, he will have to sell his Bitcoin on a p2p platform,  and after that, be charged a reasonable amount per transaction. But only just that they won't be able to have full control over the citizens money, which might indirectly affect the rate of bank loans and more.

[davis196]

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?

1.The central banks don't have fiscal policies. Only the government can regulate the economy through fiscal policy(which includes the tax system and the government spending).
2.I don't know how did you came up to the conclusion, that more people keeping funds in crypto leads to less bank deposits, less bank loans and less tax revenue. There's no evidence for this. The central banks can print money and lend them to the commercial banks, which can give them as loans to the households and companies. Crypto earnings are a taxable income and you have to pay taxes over your crypto profits.
The combined crypto market cap is estimated to be less than 4 trillion dollars, which isn't such a big number and it doesn't have such a huge influence over the fiat monetary system.

[Nathrixxx]

What is the essence of investing in what is not profitable, or what do we stand to gain after holding our finances in fiat, which loses value over time because of the effects of inflation, when there is a digital currency that could serve us as a more purposeful investment and assets, and also benefit us as a profitable one, we may also have to consider how bitcoin ETF isn't gaining attraction as before and how government are also considering their national reserve in Bitcoin.

[betswift]

I usually imagine bitcoin as like the advent of another form of gold or silver, the market will adapt to that eventually and so does the government's national budget across the world.

Just let it play out and everything will be fine and I'm sure there is countermeasure against that in place.

Agreed. Govs won't allow it to go the way wouldn't agree on

[iBaba]

~~~

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.

Further put, bitcoin is one of the most successful projects ever pushed by an individual or a few groups of individuals who brought a significant change and perspective into to how transactions are handled differently aside from the usual fiats ways we are used to. Bitcoin was the first to break the dependency of money in it’s entirety on government through the centralized system and came up with the decentralized system where you could almost completely own your money, control your money and make your own decisions without any restrictions or regulations from the government.

[tabas]

When the government has got an idea that most citizens are withdrawing their money in the banks, they're going to halt withdrawals. We've seen it with some big institutions lately like BlackRock and that's not going to be different for the government backed banks. They're going to stop withdrawals when the influx of it have surged. The effect of it will definitely going to lessen the capital that the banks are lending to their clients and so, they will also react to make sure that there will be sufficient money in the circulation instead of letting most of it flow to Bitcoin.

[Alpha Marine]

When the government has got an idea that most citizens are withdrawing their money in the banks, they're going to halt withdrawals. We've seen it with some big institutions lately like BlackRock and that's not going to be different for the government backed banks. They're going to stop withdrawals when the influx of it have surged. The effect of it will definitely going to lessen the capital that the banks are lending to their clients and so, they will also react to make sure that there will be sufficient money in the circulation instead of letting most of it flow to Bitcoin.

This is why central banks of various countries don't want people to convert their money into crypto. Aside from the fact that it reduces the demand for the country's currency, it also reduces the amount of deposits the banks get, which in turn reduces the amount of loans banks can give. Ultimately, this will affect the economy negatively if it happens on a large scale. But for now, the amount of money being kept in crypto is not significant enough to cause such a massive problem for the economy, but the government and central banks are making sure it never gets to that.

What I like about this is that the banks were feeling too big because they were an integral part of the system before Bitcoin. Now, they know that there can be an alternative if push comes to shove, so they're now both trying to act right and fight the alternative at the same time.

[Marvelockg]

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?

Saving money in bitcoin is not just because you're trying to avoid anything that has to do with taxes both from the angle of the government and systems that takes out tax from your business, rather, it's about ensuring that first of all you're in control of your funds and can dictate what happens to it, when you're going to spend it, how much you're going to spend per time without being too bothered about the policy of the government that might not be too favourable to you and your funds.

There are different ways that the government generates her revenue and ideally, the citizens funds is not supposed to be a part of the ways the government generates her revenue but the fact the government always finds a way of choking her eyes on how much people have, it's just normal that people will opt for an alternative that secures their money.

[tabas]

When the government has got an idea that most citizens are withdrawing their money in the banks, they're going to halt withdrawals. We've seen it with some big institutions lately like BlackRock and that's not going to be different for the government backed banks. They're going to stop withdrawals when the influx of it have surged. The effect of it will definitely going to lessen the capital that the banks are lending to their clients and so, they will also react to make sure that there will be sufficient money in the circulation instead of letting most of it flow to Bitcoin.

This is why central banks of various countries don't want people to convert their money into crypto. Aside from the fact that it reduces the demand for the country's currency, it also reduces the amount of deposits the banks get, which in turn reduces the amount of loans banks can give. Ultimately, this will affect the economy negatively if it happens on a large scale. But for now, the amount of money being kept in crypto is not significant enough to cause such a massive problem for the economy, but the government and central banks are making sure it never gets to that.

What I like about this is that the banks were feeling too big because they were an integral part of the system before Bitcoin. Now, they know that there can be an alternative if push comes to shove, so they're now both trying to act right and fight the alternative at the same time.

Yes, the affection of it economically is bad for a country if the majority have put their money in crypto and have withdrawn their deposits in the bank. However, I don't think that we'll see that scenario since many are not yet into crypto and don't trust it and still keeping their funds into the bank. They trust more the centralized systems through the banks and the governments and that's why they're keeping majority of their cash and deposits in it. Just like the big corporations, they've got the government's back and that's why they won't do such things like us individuals do.

[rat03gopoh]

In fact, banks have long evolved as traditional custodians of risky assets. They have vaults to store your gold, stocks, bonds, and perhaps crypto ETFs, and then they "manage" them accordingly. Banks will continue to find ways to stay afloat amidst all the changes in the business landscape; if necessary, they will also launch crypto exchanges and savings programs.

[Ucy]

Well, if the money belongs to the citizens, then they have the right to put it into good use however they like. But that right could be restricted if the money doesn't belong to them, was given by governments, etc.
 Governments or businesss shouldn't depend too much on people's hard earned money to survive otherwise they may one day be tempted to impose on citizens what to and not to spend their money on, and those who refuse to comply get punished. People may only be prevented from spending their money on things that are harmful to them or society, but we don't see this happening anywhere in the world. People are allowed to spend their money on things that are harmful, add little to zero value to human lives, like bad and unnecessary things, yet this kind of spending are not often blamed for societal issues and national economic woes, and it's where most of the spending go to. Compare that with Bitcoin, a financial system that benefits people economically and uphold human rights that fiat system is known to violate.
By the way, Bitcoin and human/national economic relationships tend to be mutual — Bitcoin benefits the citizens and their economies while the citizens contributions may benefit Bitcoin. Unfortunately, certain insecure countries try to make the relationship one side by refusing people from buying, but allowing them to sell. This is unfair relationship and qualifies as cheating.
If the relationship is balanced or known to be balanced, there won't be need for topic like this

[taufik123]

In fact, banks have long evolved as traditional custodians of risky assets. They have vaults to store your gold, stocks, bonds, and perhaps crypto ETFs, and then they "manage" them accordingly. Banks will continue to find ways to stay afloat amidst all the changes in the business landscape; if necessary, they will also launch crypto exchanges and savings programs.

There is a lot that can be done, but of course it is still hindered by several different regulations, especially regarding crypto and its development, it is not easy and needs various research and trials.
Banks make money in many ways, using customer money and making a profit from it, moreover banks have more profits with fees charged every month when you use the bank as a deposit.

Now not everyone is moving their assets to Bitcoin, many are still sticking around for security reasons and fluctuation risk.

[serjent05]

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

The government can have multiple approaches on this one, it is either they will stay neutral, implement negative regulation, or take advantage of the scenario and adopt Bitcoin.

The sad thing is that, if the government alienate Bitcoin and banned it, the citizen won't do anything but to comply.  In the end, in a centralized system, those who are in authority will be the one to decide the next step,

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

Is there really such a thing, right now?  As far as I know, Bitcoin has a little influence on how government manage their economy.  But if the time comes that Bitcoin has dominance in economic influence, it would be harder for the government to implement taxation due to the features of the Bitcoin blockchain.  The government need to strive hard for Bitcoin to enter the centralized exchanges in order for them to trace fundings.  But I do not think the government is too dumb to be controlled like that, instead they will try to control Bitcoin by implementing regulations that enable them to have control over the data of people who own and uses Bitcoin.

[Questat]

In fact, banks have long evolved as traditional custodians of risky assets. They have vaults to store your gold, stocks, bonds, and perhaps crypto ETFs, and then they "manage" them accordingly. Banks will continue to find ways to stay afloat amidst all the changes in the business landscape; if necessary, they will also launch crypto exchanges and savings programs.

They probably believe that Bitcoin is more risky compared to the assets you mentioned. That’s usually how banks think, they prefer assets that are within the system they can control.

Bitcoin is decentralized, which means people can move money or store value without relying on banks. Because of that it’s a completely different setup from traditional finance.

And we also can’t expect everyone to invest in Bitcoin. It requires some knowledge to understand how it works and how to minimize the risks. For some people that feels complicated, so they still prefer to trust systems that are backed or regulated by the government rather than something that operates outside of it.

[ThemePen]

They probably believe that Bitcoin is more risky compared to the assets you mentioned. That’s usually how banks think, they prefer assets that are within the system they can control.

Bitcoin is decentralized, which means people can move money or store value without relying on banks. Because of that it’s a completely different setup from traditional finance.

And we also can’t expect everyone to invest in Bitcoin. It requires some knowledge to understand how it works and how to minimize the risks. For some people that feels complicated, so they still prefer to trust systems that are backed or regulated by the government rather than something that operates outside of it.

It is because Banks see items under their power and tax, and this is main reason why they usually view Bitcoin as risky item or stay away from it due to high rule costs. I also back fact that hard gap is main test, and many people are afraid of need to manage their own digital keys and would other call bank if they forget passwords.
You are right because even though people always trusted systems set up by governments, like dollar, higher rising prices and world war fighting will push more buyers to move to Bitcoin whose safe spot will go past government falling. My own view is that we will get into mixed world where one does not need to be pro to use Bitcoin, in same way that people use internet today without knowing its code.
Banks will finally try to control Bitcoin by giving storage and help, but will never be able to change its limited amount, and that is reason why learning about it at this time is very good to people who want to be truly free in their money.

[yhiaali3]

In short If citizens shift a significant portion of their savings from the traditional banking system to Bitcoin, the state budget and the banking sector and monetary policy and fiscal policy will be profoundly affected. The government's ability to borrow or control liquidity and levy taxes will become less effective, while Bitcoin's role as a store of value outside state control will increase.

For example the existence of a strong competitor like Bitcoin reduces the central bank's ability to control prices and interest rates, and somewhat limits what the central bank can do before people convert their assets into Bitcoin.