on the crypto
Digital currencies could replace bank accounts as low interest rates make them increasingly obsolete. This is the opinion of Massimo Buonomo, the global UN blockchain expert, who added that digital currencies, in particular the Central bank digital currencies (CBDC) could soon "eliminate the need for a bank account" altogether.
Cryptocurrencies in the vision of the future global economic order
Speaking in an online panel on the future post-coronavirus global economic order last week, Buonomo said that banks and credit cards have long enjoyed a duopoly on digital payments, but the advent of digital currencies means that users they could avoid them altogether.
Low interest rates, applied by central banks to encourage higher debt, could speed up the process, he said, as they incentivize account holders to seek returns elsewhere.
The Bank of England, for example, is actively reviewing negative interest rates. Even US President Donald Trump recently pushed for negative rates, calling them a "gift".
Less commissions, more convenience for savers
Buonomo has been the UN expert on fintech and, consequently, blockchain and cryptocurrencies, for almost 10 years. During its mandate, the international organization initiated a series of cryptocurrency-related initiatives, such as sending aid to Syria via Ethereum and enabling cryptocurrency donations for UNICEF.
In the panel in which he intervened, Buonomo said that banks remain vulnerable to hacks and, together with credit card companies, add friction by charging transaction fees.
By contrast, digital currencies "allow you to hold digital money, allow you to pay bills, use your cell phone without credit cards, no commissions for credit card companies and no commissions for banks for money transfers. ", he has declared.
CBDCs are the real alternative
Of course, questions remain about what type of digital currency could replace the ubiquitous bank account. On this aspect, Buonuomo proved very cautious, saying that technological limitations and privacy implications mean that most public blockchains are largely unsuitable for a national digital currency.
Regulators would need global control over the system, he said, and many public blockchains don't have the required throughput. Central Bank Digital Currency (CBDC) are the real alternative, Buonomo said.
The question is whether central banks can rely on commercial banks to distribute money, just as the Digital Dollar Foundation proposed last week, or whether they would become more radical by issuing funds directly to individuals and Investors.
The "one-tier model" would be the "most disruptive," he said, and equally feasible. Central banks could abandon sophisticated social security systems in the developed world to distribute currency to "those who need it most." In a sense, social security systems could become the issue model for central banks, Buonomo suggested.
