Former US Federal Reserve executive Rod Garratt says that a cashless economy in the US could be possible with the further development of blockchain
Rod Garratt is currently Professor of Economics, University of California Santa Barbera Cryptocurrencies and Global Monetary Policy, and was a research advisor for the Bank of England, and a Vice President of The Federal Bank of New York
Professor Garratt made the comments at a recent MIT Business of Blockchain conference held on April 23rd in Boston, suggesting that central banks will soon start adopting blockchain.
A cashless society in the USA presents some complex hurdles to be overcome before it could become a reality. Research figures show that trust in the government has fallen dramatically since the 1960s, with Pew Research Centre figures estimating it was as low as 19% in 2015. Other concerns are privacy and safety issues, with many users feeling that the internet is not a trustworthy or secure environment with almost weekly reports of fraud or large-scale hacking.
Garratt suggests that that central banks will soon issue their own cryptocurrencies, and was previously an advisor to the Bank of International Settlements (BIS), which had been investigating this feasibility. However, the organization, based in Switzerland, recently stated that they felt that a central bank cryptocurrency would destabilize the US economy.
The concept of a cryptocurrency called Fedcoin has provoked interest over past years, based on an idea proposed in 2014 by blogger JP Koning. Since then the idea has been much discussed and the term is now generically used to describe a Central Bank digital currency which could be overseen by the Federal Reserve, IMF, and the World Bank. Unlike Bitcoin, Fedcoin would have a fixed exchange rate with the U.S. dollar, and would reportedly eliminate the volatility factor, a feature of cryptocurrencies which worries many users.
Sweden as a model
Garratt identified Sweden as an example of the cashless economy. The Swedish government is currently exploring the notion of its own cryptocurrency called the e-Krona. The idea would be very much in keeping with a country where cash accounts for less the 1.2 percent of its GDP. Cash is increasingly becoming unpopular as a payment form and many Swedish banks have eliminated cash transactions altogether.
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