Digital currencies could supersede bank accounts as low-interest rates make them increasingly obsolete.
That’s the view of Massimo Buonomo, the UN’s global blockchain expert, who added that digital currencies, particularly central bank digital currencies (CBDCs), could soon “eliminate the need for a bank account” altogether.
Speaking on an online panel discussing the future post-coronavirus global economic order on Thursday, Buonomo said banks and credit cards have long enjoyed a duopoly on digital payments, but the advent of digital currencies means users could sidestep them entirely.
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 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,
According to Buonomo, interest rates were the one remaining killer app for bank accounts. But they are in danger of becoming obsolete in the face of digital currencies, which can process electronic payments just as easily.
“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.