Is the creation of the digital euro in the interest of our governments-min

Is the creation of the digital euro in the interest of our governments?

Due to our previous article on the new creation of the digital euro, we can ask ourselves whether it is really in the interest of the economy to have more control over our capital. In other words, whether it is in the interest of the underground economy and money laundering.

When we talk about money laundering, we are talking about a person who carries out fraudulent economic activities, putting illegal money into the system.

To give an example of fraudulent activity, we can consider any organization that during the day is dedicated to its main activity (let’s say a hairdressing salon), using it as a cover, and carrying out the activity with the highest income at night, where it acts for example as a drug trafficking business.

It is very difficult for the Treasury to control all the people who enter the salon to get a haircut, because when you get a haircut, you do not receive an invoice that you have had a haircut, you simply pay the corresponding amount and you leave fucked because you have been cut more than the bill. In short, it is very difficult to control.

The owner of the hairdresser’s can declare to the tax office that 500 people have come in during the day, putting the money from drug trafficking as a hairdressing activity, when in reality, in his activity as a hairdresser, he has cut the hair of 100 people. In this way, he manages to put illegal money into our monetary system.

Imagine if all businesses committed such an infraction. There would be an over-circulation of capital in our markets, creating inflation as there would be an excessive increase in the money supply, so that since everyone has money, everyone wants more, making the market more expensive.

The most typical method happens in lottery betting. In the media, I’m sure you’ve all heard about the typical person who has won the lottery 5 years in a row, and we’re thinking “damn, what luck”. Well no, no one is that lucky.

The hairdresser mentioned above gets more capital through drug trafficking, and as it would be very crazy to declare 500,000 euros through the hairdresser, he decides to contact one of the lucky winners of the big lottery prize, offering to buy the ticket for 600,000. The beneficiary of the lottery gets an increase of 100,000 euros more, so he accepts and our drug dealer hairdresser has gotten rid of the illegal money, putting it on the market and getting rid of all the trouble (although now all this is much more controlled, or so we are told).

Well, all fraudulent money is in cash, it never reaches the banking system, because otherwise HACIENDA would ask where this capital has come from and well, we all know the end of the story, so the end of this black money is used in the day to day, for the payment of consumer goods, services or other whims.

So why would the system be interested in money laundering?

There is no activity that generates money faster than activities in the underground economy, so although they do not make us see it, it has much more strength than we imagine.

As we can see, the underground economy represents a very important part of our productive fabric, indicated in % of GDP (17.2% in Spain), observing therefore, that the underground economy benefits our economy although it is considered illegal.

In other words, it generates such large revenues in such a short period of time, that could not be seen in any other licit activity, so… why not close our eyes?

Our rulers are much more interested in this than we think, even going so far as to facilitate its occurrence. These enormous amounts of money generate a lot of liquidity, thus indirectly activating an expansive monetary policy, encouraging investment with these contributions.

Therefore, the government in charge of the implementation of this new digital euro may not benefit as it will see how many economic indicators will decrease with respect to previous years, due to the regulation of cash and therefore, the decrease of fraudulent activities in the underground economy.


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