UN expert: Is digital money replacing bank accounts?
Low interest rates, he said, were the main incentive to come and join a new bank – but they would be obsolete in competition with an official digital currency, which could easily process a digital payment in the same way.
Additionally, Buonomo said that digital currencies, especially central bank digital currencies (CBDCs), could eventually replace all bank accounts.
He made the remarks during an online panel discussing the future of the world beyond the coronavirus pandemic, saying new digital forms of money may be able to bypass the long-standing throne of traditional payments. in cash and by card.
Buonomo said digital currency could have its benefits, including better security than traditional banks that are often hack-prone, and the absence of cumbersome fines and fees that traditional banks often impose on customers.
Buonomo didn’t have a definitive answer on which cryptocurrency would become the default mode of currency in this scenario, though he said technological limitations and the need for privacy will matter for most public blockchains. He said regulators should have full control over a cryptocurrency-powered system that would replace traditional banking.
One way Buonomo could see this happening is if a new cryptocurrency was created and issued by a central bank.
This idea was explored by PYMNTS recently when the pandemic was in its early stages, when a US stimulus distribution proposal involved a new “digital dollar.” This could have meant a balance expressed in dollar value made up of digital entries, recorded as liabilities in Federal Reserve bank accounts, or an electronic unit redeemable by a legitimate financial institution, according to the document.
Visa also explored the idea, with a patent application for its own blockchain-backed digital currency.
And in China, the government is working on a pilot to test a new digital yuan with several companies including Starbucks, McDonalds and Subway, which could launch later this year.