Co-founder of BitMEX exchange and crypto expert Arthur Hayes spoke about the global debt crisis, financial problems in Europe and France’s role in all this during the TOKEN2049 conference, which takes place in Singapore on October 1-2, 2025. This is reported by the Incrypted team who are at the event.

America First, Germany First and Japan First

The theme of Hayes’ speech was Bastille Day: Celebrating France’s Exit from the Eurozone. Within the framework of the event, the expert highlighted the underlying problems in the global economy through the prism of the coming crisis in France, and after it – in the whole of Europe.

According to Hayes, the course of the new White House administration – America First – has closed the U.S. market for foreign exporters, which, in turn, will lead to a change in the balance between surplus and deficit in the budgets of different countries.

The expert operates with such a concept as net portfolio balance, which shows the ratio between capital inflows from equity securities and direct purchases of shares by foreign investors.

According to Hayes, export-oriented Germany and Japan are the richest countries by this measure, while the U.S. and France are the poorest, with deficits of 58% and 38%, respectively.

The current approach of President Donald Trump’s administration has led to the fact that the first category of countries will no longer be able to provide finances to the second, and this will force them to start printing money, the expert said.

TARGET balances

This term refers to the net positions (loans or debts) of national central banks vis-?-vis the European Central Bank or vis-?-vis the rest of the system, arising from the movement of money between countries.

If the banks of a certain jurisdiction send more money than they receive, that regulator will have a negative TARGET balance and vice versa.

“If the euro disappeared and national currencies recovered – where would you hold your capital?” – Hayes asked the audience a rhetorical question.

According to the expert, France had a positive TARGET balance at the beginning of 2021. But current values point to capital outflows from the country, the largest in the eurozone. Local investors are transferring funds to Germany and Luxembourg, which indicates a loss of confidence in the country’s economy, says Hayes.

And this is normal, he emphasized, as capital chooses more stable and steady jurisdictions. Hayes calls TARGET balances a kind of “canary in the mine,” an indicator of the mood of capital holders in the local market.

The reasons for this situation, the ECB’s dilemma and the role of its head Christine Lagarde

Hayes believes that the responsibility for the looming debt crisis in Europe lies, at least in part, with the ECB. He uses 2011-2012 as an example, when a similar situation unfolded.

He says the ECB’s approach can be characterized as, “If you don’t meet our demands, we will stop printing money to buy your bonds.” And control over this printing press is held by Lagarde, he emphasized.

In the section of France, according to Hayes, the ECB is blocking the purchase of bonds to fill the deficit, as it seeks the adoption of the draft budget proposed by Prime Minister Francois Bayrou. Recall that at the end of August 2025, the far-right and far-left political forces in France rejected the compromise and opposed a vote of confidence in the current government.

“Acceptable budget” from the point of view of the ECB, according to Hayes, is one in which the share of the deficit does not exceed 3%. Such a rule was established after the pandemic. Bairu’s draft budget falls under it because it includes significant spending cuts, but not everyone supports it.

This puts the French government in a difficult choice – take the side of the ECB or citizens who are pushing for more social security. In such a case, the authorities could go for some pretty harsh measures, Hayes believes, viz:

• conduct a foreign asset seizure (53% of French stocks and bonds are owned by foreigners);
• introduce capital control measures to avoid an outflow of funds from the banking system;
• force private capital to finance the government directly.

This action will set off a chain reaction, Hayes believes. The seizure of foreign assets will discourage holders of capital, forcing the government to tighten controls on its movement. The private capital remaining in France will be forced to buy government bonds at interest rates affordable to the government but unprofitable.

According to Hayes, in the case of Frexit, i.e. France’s exit from the EU, it could bring this political bloc to the brink of total collapse. Losses on the country’s debt would hit European banks hard, which would need a bailout of €5 trillion.

This will force the EU central banks to print money, the expert believes. As a result, French stocks and bonds will collapse even before the government introduces capital control measures.

Then there are more global consequences. Investors will start selling off other European assets. In addition, the central banks of Japan and the U.S. and other countries that lent money to France will also be forced to print money to make up for the losses.

In addition, no EU country will agree to stick to the 3% budget deficit limit any longer. Ultimately, according to Hayes, it’s up to Germany to agree to further finance the bloc.

ECB dilemma: print now or print later

According to the expert, it is a choice without a choice:

• to print money now is to agree to fiscal expansion in various countries, resume quantitative easing (QE) and buy bonds. This means giving power back to national politicians and losing control to the ECB;
• printing money later is to wait until France threatens to leave the EU and confiscate foreign assets, at which point it will have to print €5 trillion in financial aid and resume quantitative easing for the remaining countries. The result is a loss of control.

Hayes sees the euro as a failed experiment. According to him, it is only an imaginary mask of stability, behind which structural problems are hidden.

The expert believes that bailout is only a matter of time. It is impossible to save France, but it is also impossible not to save it. This will in any case lead to trillions of liquidity flowing into global markets.

This is especially important for investors in crypto-assets, summarized Hayes. According to him, European assets will be unattractive for a long time, which, one way or another, will force capital holders to look for alternatives.