Central Banks May Go Crypto, Per Morgan Stanley. But Can They Survive?
A team at Morgan Stanley has concluded there are a series of possible crypto use cases for central banks. But with the long-term economic and political trends that the cryptoverse are feeding into, will central banking as a national practice even have survived one-hundred years from now?
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Crypto in the Cards?
Financial services titans Morgan Stanley deployed a team under the purview of strategist Sheena Shah to deduce the ways in which cryptocurrencies could be applicable to the operations of the world’s central banks.
Now, Shah’s team have released their findings, and they didn’t report back empty-handed. Instead, Shah and her colleagues identified a series of pertinent central banking applications, chief among them being using crypto-assets to actualize unprecedented negative interest rates.
To that end, the team noted:
“Freely circulating paper notes and coins (cash) limits the ability of the central banks to force negative deposit rates. A digital version of cash could theoretically allow negative deposit rates to be charged on all money in circulation within any economy.”
Indeed, such a use case would be a natural and unsurprising one for the biggest banks in all the lands. But here’s the matter at hand: even if central banks are inclined to embrace crypto, can they survive the radical decentralization that cryptocurrencies will bring about over the next century?
A Question Worth Pondering
Taking imagination, possibility, and technical speculation altogether, it’s interesting, albeit ultimately inscrutable, to project where blockchain and top cryptocurrencies like bitcoin and ether are going from here.
With that said, though, there are a few macro-trends in play that are all but impossible to ignore in the long-term. For one, consider the underlying societal trend toward digitization, e.g. digitizing money, that cryptocurrencies are digging into.
That’s an economic trend. Yet crypto’s underpinning tech, blockchain, also taps into powerful political trends, namely decentralization. Decentralized governance seems to be the latest marker in a long line of humanity’s most pivotal intellectual developments, e.g. the Magna Carta or the Gutenburg printing press.
If blockchain + crypto end up being as revolutionary or moreso than humanity’s most political developments hitherto, then it’s not unreasonable to wonder just how different the world will look socioeconomically in the future.
This is not to say there won’t be any central banks by 2020 or even 2050. But what about by 2120, one-hundred years from now? Even that may be a stretch, yet still, the suggestion is still the same: if humanity’s on a long, steady march toward state-less digital money and decentralized power structures, does it not stand to reason that central banks may be facing the very beginning of their very end?
Maybe, or maybe not.
Obviously, there’s a spectrum when it comes to crypto’s thought leaders. Some say crypto will be absorbed and adapted into the mainstream. Others think crypto will turn the mainstream on its head.
If this latter lot ends up being right, a future without central banks isn’t so inconceivable, however radical that possibility sounds to contemporary ears.
What’s your take? Do you think the mainstream will absorb, or be absorbed by, the blockchain and cryptocurrency booms? Sound off in the comments below.
Images via Market Exclusive, CNBC