UN EXPERT: DIGITAL CURRENCY COULD REPLACE BANK UN EXPERT: DIGITAL CURRENCY COULD REPLACE BANK ACCOUNTS IN ERA OF LOW INTEREST RATES
A UN Global Expert on blockchain has predicted that digital currencies could replace bank accounts as low-interest rates render the latter increasingly unattractive.
Massimo Buonomo, UN Global expert in blockchain, cryptocurrencies, fin-tech, green-tech and reg-tech, said CBDCs could render bank accounts unnecessary as low interest rates robs bank accounts of their remaining “killer app.”
Writes CoinDesk:
“Low-interest rates, enforced by central banks to encourage more borrowing, may expedite the process, he said, as they incentivize account holders to hunt for returns elsewhere. The Bank of England, for example, is actively reviewing taking interest rates into negative territory, meaning savers would pay the banks to hold money in their bank accounts. U.S. President Donald Trump recently pushed for negative rates, calling them a ‘gift.’”
It quotes Buonomo:
“‘Those who are going to suffer the most [from digital currencies] are the credit card processing companies and the banks because, in the current interest rate environment, your [only] advantage of having a bank account is that it enables digital payments,’ he said.”
In South Korea, the Bank of Korea plans to launch a CBDC pilot program by the end of 2021, though the country’s well-developed digital payments system makes it likely that any CBDC issued would be aimed at financial institutions rather than individuals.