The French central bank’s bulging financial deficit could unlock billions of dollars with new Bitcoin capital, potentially lifting new Bitcoin capital.
Bank de France (BDF), the French central bank, reported a net loss of 7.7 billion euros ($8 billion) in 2024, driven primarily by negative net interest income.
This brought the French government’s deficit to 168 billion euros ($176 billion) in 2024, accounting for 5.8% of the country’s gross domestic product (GDP), significantly exceeding the European Union’s 3% limit.
The French central bank is currently one of the bloc’s worst performances, with lacking signaling capital flowing out of the country.
Arthur Hayes, co-founder of Cryptocurrency Exchange Bitmex, believes that the French financial deficit could catalyze the “trillions of euro” money print by the European Central Bank (ECB) and show fresh liquidity flowing into Bitcoin (BTC).
“The French capital has left France, and if you look at the significant changes in the other members, it’s the worst,” Hayes told Cointelegraph in an interview at Token2049 in Singapore. “The real threat is that Germans and Japanese people leave the French capital to invest in the home market as the United States is changing the world order.”
“That’s the ECB forecast to print now or later for trillions of euros. That’s the total size,” Hayes said. “One other great thing for cryptography.”
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ECB prints “now or later”
About 60% of French bonds and debts are owned by foreign companies, with Germany and Japan as the two largest bondholders.
However, with cuts in US investment, the German and Japanese capitals, which previously funded French budgets, are no longer flowing, Hayes said.
“My paper is basically an ECB print or I print it later. In both cases, people lose control because they have defaults, redecoration, capital controls, printing, money printing and life.”
According to Hayes, the ECB can try to print later to save the European banking system or print it now to allow French spending. “There’s no other option,” he said.
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The increased French budget deficit could encourage the ECB to pivot into quantitative easing (QE). This refers to the central bank purchasing bonds and putting money into the economy to encourage spending on the economy.
In 2022, Bitcoin benefited from QE announcements from some of the world’s largest banks, including the US Federal Reserve.
Bitcoin prices rose more than 1,050% from just $6,000 in March 2020 to $69,000 by November 2021, after the $4 trillion bond purchase program was announced on March 23, 2020.
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