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On January 7, activists of the French basic political movement, the Gilets Jaunes – Yellow Vests – announced a bank run through social media, hoping essentially to achieve their goals by destabilizing the local financial system.
Nicknamed the "Referendum of Collectors", the latest demonstration of the movement invites supporters to withdraw their savings from financial institutions on Saturday 12 January. While political action does not mention cryptocurrencies, it seems that such a run on banks may hypothetically influence the crypto market – and vice versa.
What is a bank run?
A bank run means that many people withdraw their money from a particular bank. It usually happens when investors start thinking that their bank may cease to operate in the near future.
As a result, a fractional reserve banking system – in which banks maintain some of their local assets, usually at least a fraction of their deposit liabilities – is questioned, while people begin to opt for other businesses instead of fiat: for example, bonds, precious metals or, in theory, cryptocurrencies, since their decentralized structure could guarantee greater independence from financial institutions.
There have been numerous banking transactions throughout history, particularly during the Great Depression and the 2007-08 financial crisis. However, according to academic research on bank runs, they tend to occur naturally due to panic and rumors among depositors rather than voluntarily, making it more difficult to assess the potential effectiveness of the Yellow Vests plan.
Brief introduction to the Yellow Vests movement and their bank management plan
The Yellow Vests movement began in November 2018, when various posts on social media suggested blocking roads and using high visibility yellow vests as a symbol of solidarity and support (hence the name). Mass protests ensued throughout mainland France, with the immediate cause of carbon taxes for gasoline and diesel introduced by French President Emmanuel Macron. As a result, activists demanded lower fuel taxes, the reintroduction of wealth solidarity tax, a higher minimum wage and Macron's resignation.
Another crucial point for the Yellow Vest movement is the Référendum d'initiative Citoyenne (Citizens Initiative Referendum – RIC), the proposal for a popular referendum where citizens can propose and repeal laws, amend the constitution or remove an elected representative . Essentially, it is a form of direct democracy similar to that used in Switzerland.
In a matter of weeks, protesters prompted the French government to suspend fuel tax and increased electricity tariffs. In addition, Macron introduced more measures to restore peace: a minimum wage increase, a reversal on a planned tax hike for low-income retirees and tax-free overtime and year-end bonuses. However, the protests are still ongoing. The latest series of demonstrations, dubbed "Act VIII", brought even more skirmishes to the streets of France on 5 January.
"Act IX", in turn, is scheduled for next Saturday 12 January. And, according to some posts on social media, will be accompanied by a bank run on top of more traditional demonstrations. So, speaking on a video uploaded on Facebook on January 7th, an activist named Tahz San says:
"For the act IX, we will scare this state legally and without any violence […] through the Référendum des percepteurs [Collectors’ Referendum]. […] We all know that the power of a country is not in the hands of the government but in that of the banks. If the banks weaken, the state weakens immediately. […] Saturday, at 8 we will all vote by withdrawing our money […] until the RIC is imposed. "
It does not matter the amount that will be withdrawn, and it is advisable to spend it in some local craft store or to save at home "under the mattresses, as our grandparents did", according to San. In the event of a failure, the operation should be repeated the following month.
The same idea was soon expressed by Maxime Nicolle, also known as "Fly Rider", a famous spokesman for the basic movement. "Many people withdraw their money from the banks, many, many, many," he said while discussing the so-called "tax collectors" referendum "in a live broadcast on Facebook." We will return our bread. […] You're making money with our dough, and we're fed up. "The video has accumulated around 1 million views.
Therefore, the defenders of the bank's race hope to force the French government to meet their demands in a non-violent way. In other words, the debt collector referendum could be compared to the recent Proof of Keys event organized by the entrepreneur Trace Mayer among the members of the crypto community. Timed to coincide with the tenth anniversary of the Bitcoin genesis block, the event aimed to motivate Bitcoin users to remove all the coins stored with trusted third parties and to regain control of their private keys.
How popular is Bitcoin in France?
The extent to which the protestors seem to support cryptocurrencies has not been measured, but some photos of an alleged demonstrator wearing a yellow vest that reads "buy bitcoin" on the back have become viral among the encrypted blogs. In addition, similar vests are currently on sale on Amazon.
Image source: Twitter, @ydemombynes
Moreover, for the tenth anniversary of the Bitcoin genesis block, the French graffiti artist Pascal Boyart unveiled his mural entitled "La liberté guidant le peuple 2019", based on the famous painting by Eugene Delacroix of the French Revolution, but which presents people with waistcoats Detective stories. According to Boyart, he hid more than $ 1,000 in BTC. The address of the prize portfolio is public, with the entrepreneur Alistair Milne who encourages Bitcoin users to donate to the project to further increase the size of the treasure.
Image source: www.pboy-art.com
However, there are clearer signs that Bitcoin enjoys official recognition in France, however. In November 2018, the local tobacco federation (Fédération des Buralistes) obtained permission to sell Bitcoin (BTC) in tobacco stores from January 2019.
In an agreement with KeplerK, a French cryptocurrency portfolio provider, up to 4,000 small stores will sell Bitcoin coupons in denominations of 50, 100 and 250 euros, which customers can then exchange for cryptocurrency on the KeplerK website when they open a portfolio.
However, in response to news on the crypto-friendly license, the regulator of the French stock market, the Autorité des marchés financiers (Financial Markets Regulator), issued a warning jointly with the central bank of the country and the French Authority for Prudential Supervision and Resolution (ACPR). remembering the risks associated with "speculative" cryptographic resources.
Interestingly, a privately owned French radio network, Europe 1, insisted that ACPR had "no choice" but to approve sales due to the speed at which cryptocurrency was entering consciousness of the traditional consumer. Despite the uncertainty, several tobacco stores in Paris have already started selling Bitcoin for fiat.
Overall, France has issued conflicting messages on cryptocurrency at the state level, largely demanding international regulatory initiatives. On the other hand, the head of the French government's cryptocurrency working group, Jean-Pierre Landau, said that over-regulation would have produced a "three-pronged danger".
"The danger is threefold: that of freezing the rapid evolution of technology in legislation, that of failing to grasp the true nature of the object that we intend to regulate and that of pushing innovation towards regulatory avoidance. On the contrary, regulation should be technologically neutral and, to become such, address the actors and not the products themselves ".
So the rush to the bank will probably be successful, and what could it mean for crypts?
As the French magazine Capital says, the potential element of disturbance of the next bank run could be considerable: when banks start to collapse because of their inability to cover operating costs, the entire sector risks failing altogether. However, he also emphasizes the voluntary nature of the Yellow Vests bank run, noting that the eventual participation may be low enough not to start a crisis.
Capital also notes that the average amount withdrawn daily in France is 342 million euros, while approximately 126,000 people have marched to France in support of Yellow Vests on December 8th. As a result, at least 100,000 of them would have to withdraw around 3,400 euros to reach such an amount. Furthermore, there are daily withdrawal limits between 300 and 500 euros on debit cards for regular users, which would make the whole process more complicated.
Christopher Dembik, head of macroeconomic research at Saxo Bank, also seems skeptical about the ability of the movement to shatter the banking system. He told the capital:
"Triggering a bank race requires huge queues at the desks, very honestly I think the strength of the yellow jackets is too weak to destabilize the sector even at the margin".
As of November 2018, banks in France have a reserve of € 449.7 billion in deposit accounts available for collection at night, according to data from the European Central Bank.
However, the fiat bank runs contributed to Bitcoin's first appeal, with the Cyprus financial crisis in 2013 that seemed to increase the price of cryptocurrency.
According to a report by the largest French bank, BNP Paribas, the impact of the Yellow Vests movement on the French economy may be significant, but temporary. Banque de France estimated that the impact on economic growth in France would be reduced in the fourth quarter of 2018, from a 0.4% forecast to 0.2%, due to the Yellow Vests crisis.
Therefore, one can only hypothesize the effects that a French bank could have on the encrypted market and whether the cryptocurrencies could also simplify the protest. For example, Max Keizer, host of the RT show "Keizer Report", he believes:
If every Frenchman turns 20% of his bank deposits into #Bitcoin (and taking a Bitcoin debit card to use for everyday stuff), French banks and the government would collapse and a lot of bloodshed could be avoided. #jilletsjaunes #JeSuisSatoshi pic.twitter.com/stKqKHYHWl
– Max Keiser, tweet poet. (@Maxkeiser) December 9, 2018
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