On a dreary early-spring day on the Conservative leadership campaign trail, Pierre Poilievre stood in a crowded shawarma restaurant in London, Ont., and lobbed a grenade at Canada’s nearly century-old monetary establishment and the sanctity of the national currency.
“I want to take control of money away from politicians and bankers, and give it back to the people,” Mr. Poilievre said in a 20-minute speech in support of cryptocurrencies. It was a cross between an academic lecture and an evangelical sermon. For the photo-op finish, he bought a chicken shawarma with bitcoin.
“We need to give people the freedom to choose other money,” he said. “If the government is going to abuse our cash, we should have the right to opt to use other, higher-quality cash.”
No elected official in Ottawa has taken a keener interest in monetary matters over the past few years than Mr. Poilievre, who is campaigning aggressively for the leadership of the Conservatives, the party with the best chance of supplanting the Liberals to form the next government.
As a member of Parliament, and as the Conservatives’ finance critic, he has long been a thorn in the side of the Bank of Canada, challenging its execution of monetary policy and railing against its decision during the pandemic to launch a quantitative easing (QE) program, under which it has purchased more than $300-billion of its own government’s bonds.
He has argued, loudly and repeatedly, that the combination of skyrocketing government deficits and central bank “money printing” has been the main cause of the surge in inflation that now grips the Canadian economy. (It’s a view not shared by many economists, but it’s popular within his party and its voting base.)
Now, Mr. Poilievre’s fascination with matters of money has culminated in a full-blown embrace of cryptocurrency – not just as a valuable and, perhaps, inevitable global financial innovation, but as the path to individual liberation from the tyranny of government power over the national money system and our hard-earned cash.
This brings a heavily politicized element to Canada’s crypto conversation – a discourse populated, to this point, by an odd collection of far-right libertarians and more than a few conspiracy theorists. And it puts Mr. Poilievre, a long-time MP who served in Stephen Harper’s government, well outside of the mainstream of Conservative Party monetary thinking in recent decades.
Crypto has become a pressing – and increasingly polarizing – issue for policy-makers in government and central banking. The political tensions and regulatory questions came to the fore during the trucker convoy protests in February, when supporters tried to skirt government restrictions on donations by using cryptocurrencies.
More fundamentally, the digital economy is rapidly changing the nature of money. Physical cash use is falling, online payments are booming, and a range of new players – from big technology firms to cryptocurrency startups – are challenging the traditional role of the central bank and legacy financial institutions.
In this mix, Mr. Poilievre is promising to make Canada the “blockchain and crypto capital of the world.” He is positioning himself as a leader of the decentralized finance and private money camp, in what could be a pitched battle for the future of the Canadian dollar.
(Mr. Poilievre did not talk with The Globe for this story despite several interview requests, but he has spoken extensively on the issue both in Parliament and on social media.)
His populist message may find fertile ground. Inflation is running at its fastest pace in three decades, eating into the purchasing power of the dollar and eroding wages. Canada is also coming off a major experiment in monetary policy, the full impacts of which are still uncertain.
“Inflationary periods are always periods in which people begin to think about what is good money, why is my money worth less than it was yesterday?” said Stefan Eich, a professor at Georgetown University and author of The Currency of Politics, an intellectual history of money.
“Now it’s compounded by the double whammy of two crises. On the one hand, there’s still the aftershock of the financial crisis that opened up so many doors … And top of that you have the COVID crisis measures, where central banks not just rehashed their actions from the financial crisis, but doubled down on them and perfected them.”
The Bank of Canada has maintained that the purpose of the QE program, which ended in November, was to hold down long-term interest rates to support the economy through the pandemic, and to bring inflation sustainably back to the bank’s 2-per-cent target.
In Mr. Poilievre’s telling, the point of QE was to monetize government debt by printing money, allow the Liberal government to spend freely, then erode the public debt load through inflation.
This argument is at the heart of cryptocurrency evangelism: If central banks can create money out of thin air, perhaps people would be better off with forms of “sound money,” whose creation depends on something other than central bank discretion.
In the past, this kind of thinking was rooted in the gold standard, which served as a foundation for the currency market for most of a century, before being abandoned in the early 1970s. On a gold standard, the amount of money central banks or private banks can put into circulation is capped by the amount of gold in their vaults.
That limits central banks’ ability to adjust the money supply and change interest rates – key monetary policy tools for smoothing out fluctuations in the business cycle and supporting the economy through recessions. But for hard-money advocates, that’s precisely the point – to take the keys to the economy away from the politicians and bureaucrats.
Bitcoin, which emerged in the wake of the Lehman Brothers collapse and bank bailouts of 2008, promised a new kind of gold standard. The pace of bitcoin creation is determined by an algorithm and the total amount of bitcoin potentially in circulation is capped.
In his shawarma shop speech, Mr. Poilievre argued that cryptocurrencies have become increasingly relevant because of QE programs and the current period of inflation. He praised the decentralized nature of bitcoin, which allows transactions to be conducted peer-to-peer, without the need for financial intermediaries.
The notion that bitcoin or other cryptocurrencies could be a hard-money alternative to fiat currency (meaning government money not backed by commodities) has hordes of adherents across the Internet. Identifiable by the laser beams shooting out of their eyes in online photos, crypto true believers have created a subculture with its own language, inside jokes and quasi-intellectual tradition, hearkening back to the libertarian ideas promoted by mid-20th-century Austrian School economists.
Friedrich Hayek’s 1976 book The Denationalization of Money is a particular touchstone. It argues for the abolition of government monopolies over money in favour of private currencies that would compete with one another to keep inflation low.
Mr. Poilievre seems to have embraced this logic. A proliferation of private digital money “will force governments to compete rather than just having a monopoly … [and] if there were competition, central banks would have to create a better product to convince people to continue to transact,” he said in a conversation with the shawarma shop owner, Aly Hamam, that was posted online last week.
So far, cryptocurrencies are proving to be a poor competitor for the Canadian dollar. After more than a decade, bitcoin has made little headway as a means of payment for everyday goods and services. Cryptocurrency transactions tend to be expensive and slow to clear, and the infrastructure that supports blockchain payment systems is energy-intensive and hard to scale.
The prices of cryptocurrencies gyrate wildly, making them poor stores of value and units of account, two of the key functions of currency. There has also been a trail of frauds – notably Quadriga Fintech Solutions, a failed Canadian crypto exchange that was run like a Ponzi scheme – and a long line of cryptocurrency failures.
Nonetheless, the libertarian vision of private money competing with public money is increasingly a reality in the digital economy. Alongside cryptocurrencies, there has been the emergence of “stablecoins” – digital assets whose value is pegged to national currency, most often the U.S. dollar.
This opens the door to consumer choice and innovation in online payments. But it comes with significant risks to consumer protection and financial stability. Private digital assets are not protected by deposit insurance, and central banks can only act as lenders of last resort during financial panics – as happened in March, 2020 – using their own currency.
Central bankers are taking note. Agustin Carstens, general manager of the Bank for International Settlements (an umbrella organization for the world’s central banks), argued in a January speech that neither cryptocurrencies nor stablecoins provide a suitable basis for money, unless they ultimately tie back to central banks.
“Users may initially find great convenience in paying with a big-tech global stablecoin. But in doing so they may be handing the keys to our monetary system over to private entities, driven by profits and accountable only to their shareholders and other insiders. Such an arrangement could erode trust. A public good like money needs oversight with the public interest in mind,” he said.
The day after he announced his candidacy for Conservative Party leadership, Mr. Poilievre appeared on a podcast hosted by Robert Breedlove, a popular bitcoin promoter who has described fiat currency as “a living lie” and central-bank-induced inflation as “a corrosive moral cancer on society.”
Over the course of 36 minutes, the two bantered about monetary policy, cryptocurrency and politics, with Mr. Poilievre telling Mr. Breedlove that he and his wife sometimes listen to the podcast late into the night, after putting their kids to bed.
Mr. Poilievre speaks the language of a true believer, sprinkling references to popular theories and crypto celebrities into his social-media posts and speeches. And he has said he has invested in cryptocurrency exchange traded funds, which became legal in Canada in 2021. He has grown bolder during the leadership campaign, as he has introduced cryptocurrencies as a key issue in his platform.
“The system is broken. It’s designed for bankers and bureaucrats, for big government and big corporations to get richer and more powerful, while destroying the wages of the working people. That’s what’s happening,” he said in his conversation with Mr. Hamam.
“We need to restore sound money, and end this multimillennia abuse by leaders and dictators of our cash.”
In promoting crypto and slamming the Bank of Canada, Mr. Poilievre is tapping into several potent trends within contemporary conservatism, said Sean Speer, a senior fellow at the University of Toronto’s Munk School of Global Affairs and a former adviser to prime minister Stephen Harper.
Pandemic-related health restrictions have catalyzed a kind of “folk libertarianism,” opposed to vaccine mandates and government interventions in the economy, although this is not necessarily aligned with any one political party, Mr. Speer said.
At the same time, there’s a growing cohort of potential voters – younger, tech-savvy and predominantly male – who are attracted to the libertarian ethos of Silicon Valley and who define their identity in opposition to what they perceive as the “woke” politics of liberal politicians and mainstream media.
For both groups, bitcoin is a kind of cultural signifier.
“I think if you scratch the surface, it’s less a full-throated intellectual challenge to conventional monetary approaches than it is a kind of meme for a contrarian or countercultural impulse,” Mr. Speer said.
“I don’t know if you put a gun to Pierre Poilievre’s head that he thinks crypto is going to come to replace fiat currencies, as much as it is a symbol of disruption to mainstream institutions and conventional wisdom and conventional thinking.”
The challenge for politicians is channelling this energy bubbling up across the Internet into actual votes, first in the leadership campaign and then in a national election in three years’ time.
Christian von Donat, vice-president of government relations and strategy at the consulting firm Impact Public Affairs, said leadership campaign voters are often motivated by single ideological issues. If a candidate can capture the imaginations of crypto supporters, that could form a powerful constituency in the leadership race.
There’s a possibility cryptocurrency could play a role similar to that of cannabis legalization, which in the 2015 federal election rallied younger voters and drew in people who don’t typically vote for the Liberal Party.
“It’s almost like cannabis 10 years ago, where people were kind of slow to come around to it, and then they realized there’s a huge political potential here,” said Mr. von Donat, who has lobbied on behalf of the crypto industry for the past five years. He has seen interest in the sector grow among politicians over the past year or two.
Conservative MPs tend to be the most amenable to pitches from the crypto industry, Mr. von Donat said. Within the Conservative Party itself, support seems to be motivated by a range of factors, with some MPs seeing crypto through a libertarian ideological lens and others thinking in more straightforward pro-business terms.
Conservative MP Michelle Rempel Garner tabled a private member’s bill in February with a fairly modest proposal: that legislators commit to pursuing a national policy framework to develop and regulate the crypto industry, with input from industry players.
“I know that that’s not a really politically sexy approach that’s going to have a lot of sound bites or launch a thousand ships in terms of Facebook clicks and likes. But I think that it’s a responsible approach,” she said in an interview.
The Calgary MP – who is campaign co-chair for rival Conservative leadership candidate Patrick Brown – worries that the heated rhetoric around crypto is politicizing the sector even before Canadian leaders and the industry have had a rational, educated policy discussion about it.
“It’s, ‘bitcoin is the devil that facilitates all manner of evil’ versus ‘bitcoin is the saviour that will liberate all things.’ That’s where the poles are right now, and I think that’s where the polarization is going,” she said.
“A lot of Canadians’ first exposure to crypto, in terms of a public policy debate, was around the trucker convoy,” she added. “That’s unfortunate, to me. Because it’s really missing the point of the broader innovations that this sector is going to bring to the Canadian economy.”
Mr. Poilievre tends to opt for more extreme language – a hallmark of his 18 years in politics, during which he has earned a reputation for being a fiercely partisan attack dog. Nonetheless, he is also staking out real ground in a coming debate about money in a digital age.
Alongside the rhetoric about freedom, money printing and hyperinflation, he makes some level-headed suggestions when it comes to cryptocurrencies and the digital economy: get federal and provincial governments to co-operate on national regulations for cryptocurrencies, simplify tax rules for digital assets.
Politicians and policy-makers of all stripes face a series of crucial decisions in coming years, not only about how to regulate and tax digital currencies and assets, but also about how to manage the relationship between public and private money. The most consequential decision will be whether to launch a central bank digital currency – something the Bank of Canada is working on, but which has yet to be greenlit by the Minister of Finance.
“This change is not ‘coming.’ It’s here, it’s happening. And it’s happening whether we like it or not,” Ms. Rempel Garner said.
“I think the question that we need to ask is: what is the role of government, if any, within this space? And then, depending on that answer, how do we put a public policy in place that’s driven by industry and innovators? That’s where I hope the debate goes.”
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