U.K. Prime Minister Boris Johnson, who clearly went to Paul Weller's barber from the 1980s (Photo by Dominique from UK via Wiki Commons).
Cryptocurrencies,  Europe,  Libra,  Opinion

New Prime Minister Boris Johnson needs to turn to crypto before the EU turns on him

Is this the technology he says will solve the upcoming headaches?

Well, well, well, if it isn’t the consequences of holding a national referendum! 

On Wednesday former London Mayor and ridiculous human being Boris Johnson will take over as U.K. Prime Minister. The nation’s 160,000 Conservative members were eligible to vote in the contest and 87.4% turned out to vote. This means that the 92,153 citizens who voted for Boris Johnson got to make the selection on behalf of 66 million U.K. residents. In other words, one Conservative party member got to speak for 715 citizens. The upcoming hard-Brexit date of October 31 is going to be a Nightmare on Downing Street, but Johnson could ease Britain’s currency crisis by investing in cross-border crypto payments such a Facebook’s Libra.

Rumors of U.K. instability have kept the once-bulletproof sterling trending down over the past five years. As of Johnson’s election, the pound traded at $1.25 or €1.12. The last time we were in London, the banking fees on top of the currency exchange had the effect of halving our buying power as the greenback and the pound traded at nearly 2:1. Sterling’s devaluation spells doom for a handful of nations that need strong exports for their economy.

The best illustration of this is on the border of British Northern Ireland and the EU’s Republic of Ireland. After years of sectarian violence, local politicians have been working hard to keep a completely open border—even if that’s exactly that Brexiteers rallied against. Sightseers and Guinness truck drivers from the Republic of Ireland don’t even have to stop when they cross the border into Northern Ireland. A sign at the border merely reminds them that the next speed limit sign they see will be in miles per hour instead of kilometers.

In order to keep the locals happy and employed, Boris Johnson will have to enforce a similar situation for currency transactions. Translating 60 mph to 96 kph is consistent and people on both sides of the open border will continue to want some semblance of consistency with their exchange rates and transaction costs as well. 

The “Irish backstop” solution favored by Theresa May could have unintended consequences for trade that will only worsen without a plan for cross-border payments. In general, all nations need to find a way to send their trucks and ships full of local products on both directions of the journey. Some of the biggest proponents of open borders are shipping companies like DHL. However, if the border-free U.K. can ship Jaguars and Land Rovers to Northern Ireland for no import fees, what will happen to the “import” car dealerships in the Republic of Ireland when people realize they can just run up to the North Ireland border the next time they want to save money on the latest model XE?

Candidate Boris Johnson said vaguely that technology would be the solution. Then Prime Minister Theresa May said, “No technology has been designed or implemented to address the issue of the Irish border.” 

The good news for crypto is that any system that works—whether it’s XRP, Libra, or a new competitor—will have the equivalent effect on the new Brexit economy of, say, lowering interest rates in the region. The U.K. never joined the Eurozone currency and while a single-currency system is off the table for now, a single cross border payments system might actually be the technology that Boris Johnson hoped would fall out of the sky by October 31.

Brendan Sullivan is a writer, producer, and author of the memoir Rivington Was Ours: Lady Gaga, the Lower East Side, and the Prime of Our Lives. Disclosure: he owns cryptocurrencies. Follow him on Twitter.