The Financial News asked the question “Will digital currencies be widely used by 2030?” to a large group of financial industry experts. Their answers are given below. DisruptionBanking gave their responses a weighting of positive, neutral or negative.
Charlotte Crosswell, CEO, Innovate Finance
The Bank of England’s recent Future of Finance review for the Bank of England acknowledges the impact of technology on the new economy. It notes the need to reevaluate the current payments infrastructure and to keep abreast of developments for the tokenisation of fiat currencies. The Libra cryptocurrency announcement has accelerated thinking between industry and global regulators as they tackle a complex regulatory issue that will potentially have significant ramifications. Indeed, central banks across the world are thinking about how new digital currencies could replace traditional money. For the great majority of them however, such work is still very much at the concept stage, although some are looking to issue digital currency in the short-to-medium term.
Huw van Steenis, head of investor relations, UBS
The most interesting thing about digital money is unlikely to be the token itself. Payments will be ever more frictionless and fraudless and more of the value will be in the data, so who monetises the data, and is it secure, are far and away the most important questions. Digital currencies will be adopted, but I suspect not in the way many enthusiasts want. In all likelihood, they will be centralised and permissioned.
Todd McDonald, co-founder, R3
For central banks, the biggest barrier will be buy-in to the idea that digital currencies can have enterprise usage and that they can be married into existing processes, rather than coming in to upend them. At a consumer level, it’s a question of trust and awareness. Once individuals realise that digital currencies can have a place in their everyday lives, adoption will be much quicker. As with all consumer technologies, it will take time to build trust and awareness. We only need to look to history to see that it’s human nature to resist new technologies. Digital currencies, if properly regulated, are certainly the most exciting promise of blockchain technology, and are on the cusp of becoming a reality.
Vis Raghavan, CEO of Emea, JPMorgan
There is no reason why a digital currency couldn’t serve as a medium if it is backed by a fiat currency and is properly controlled and regulated.
Helena Morrissey, chair, The Diversity Project
I’m no expert but I think so. The move towards less cash has accelerated rapidly and the next stage seems to be a more secure digital system. The level of confidence in that security (and that applies to both the public and the authorities) will be the decider.
Norris Koppel, founder and CEO, Monese
We’re moving in this direction and there will be adoption, to an extent. We must not forget that digital currencies are likely to remain the preserve of early adopters. We must keep a mix in a modern economy, for example still keeping a place for cash in an increasingly contactless world, as well as new digital currencies.
Dan Cooper, partner, UK banking and capital markets leader, EY
It feels hard to imagine at the moment. I think the Libra episode broadly felt like a lot of grown up institutions putting their names to that launch, without really thinking that through from a regulatory standpoint. I think the regulatory frameworks that now exist around banking are so far-reaching and broad, in order to launch a global currency – a truly global currency – to get a number of regulators behind that feels quite far off for me. Maybe one day. But can I see a global currency launched and singed off by the Prudential Regulation Authority, the Federal Reserve, the Hong Kong authorities in the next 12-24 months? I think it’s exciting as a consumer, but that it also comes with a lot of practical impediments.
Stéphane Boujnah, CEO and chairman, Euronext
Digital assets, yes. Cryptocurrencies, I’m not so sure. By 2030 we will be a broadly cashless society with alternative currencies, but there won’t be broad adoption of any of the multitude of available coins. They have served as excellent proof-of-concepts, but what may follow in their place is something like a tokenised physical currency, for example tokenised gold, which is backed by physical bullion. That would provide all the utility of the cryptocurrency, albeit with the trust and transparency of a fiat currency.
David Mercer, CEO, LMAX Exchange Group
It is simply inevitable that we will all be using digital currencies in 2030. Most likely they will be a digitised dollar, pound and deutsche mark. Yes, this would mean a collapse of the EU, but bitcoin also stands a fair chance of winning out. The next generation of workers will not hold truck with current antiquated banking, and cash as a form of payment.
Peter Harrison, CEO, Schroders
There is no doubt technology is transforming financial services and the way we interact with money, and this will evolve further over the next 10 years. While there are clearly technical hurdles and regulatory uncertainty, there is an inevitability that there will be further initiatives and, one day, more adoption. Central banks should rightfully remain wary, but the pace of consumer change may prove too aggressive unless greater understanding is provided. New technologies are opening up new possibilities but these are not necessarily the solution to every challenge nor a replacement to every existing utility. Furthermore, there are hurdles to implementation, including technical, regulatory and even behavioural barriers which will impact the rate and scale of adoption.
Cécile Nagel, CEO, EuroCCP
There is no doubt that the adoption of digital currencies will continue to increase over the next decade. The biggest hurdle to achieving more mainstream adoption of digital assets is the lack of trust and transparency in the current system. Significant levels of crypto activity remain unregulated, which limits the ability of institutional investors, as well as individuals, to capitalise on the opportunities this market may represent. Regulators have been stepping up their efforts to subject crypto assets to more oversight, so it is likely that we will see digital currencies adopted more broadly by 2030.
Christophe Roupie, head of Emea and Apac, MarketAxess
No. They will find a useful niche.
Keith Skeoch, CEO, Standard Life Aberdeen
Today I can’t see digital currencies being widely used by individuals, let alone central banks. There again, 10 years ago I didn’t envisage mobile phones being used as debit cards. In 2030, the world’s base currency will continue to be the US dollar, perhaps closely rivalled by the renminbi.
Mike Bodson, president and CEO, DTCC
The institutionalisation of digital currencies is progressing, and I can’t envision a reason why this progress would not continue over the next 10 years. One of the top issues the industry and regulators will need to address to enable the widespread adoption of digital currencies is ensuring that crypto-assets are subject to the same robust regulatory requirements and post-trade processes as other, more established asset classes.
Michael Spencer, chairman, IPGL, and director, CME Group
They will only be adopted by individuals on a significant scale if central banks support them. Currently that looks unlikely, but who knows what may change in the next five years.
Eoin O’Sheam, founder and CEO, Temple Grange Partners
Digital currencies are not new, they have already been universally adopted. It is how the modern banking system functions. Virtual currencies on the other hand (eg bitcoin) will increasingly be issued by sovereign states making use of distributed ledger technology, either linked to traditional currencies or in parallel (e-currencies).
Karim Haji, head of financial services, KPMG
Much of the interest around cryptocurrencies and how they can be used in the future revolves around this eventual idea of banking the unbanked – which is a benefit that I know much of the industry and many governments would be keen to realise. Cryptocurrencies’ potential benefit to underserved communities, if appropriately implemented and adopted, could be uniquely transformative, but getting there in a decade is a bit ambitious in my view.
Mark Yallop, chairman, FICC Market Standards Board
I don’t think so, because regulators and nations will want to retain control of their fiat currencies.
Romi Savova, founder and CEO, PensionBee
It is possible that digital currencies will be broadly adopted by the end of the next decade, but let’s remember that many parts of the economy still rely completely on paper. In the pensions industry, we often even receive cheques. Currencies are backed by trust, usually the trust afforded to fiat money. Recent attempts by private, non-government consortiums to issue digital currencies have been met with scepticism. Therefore, broad adoption would likely require a major central bank issuing digital currency. The Bank of England is currently researching the potential to issue a digital currency, but given the broad-ranging implications of such a move, it is unlikely to happen quickly.
Michael Niddam, executive partner, Kamet Partners
Central banks are inherently conservative so digital currencies would go against the grain. Perhaps a few smaller countries might experiment, but large-scale adoption is unlikely. In terms of digital currencies for individuals, one should differentiate between cryptocurrencies and blockchain. Many of the services we use may incorporate blockchain by 2030, but this could be invisible from the consumer’s perspective. For cryptocurrencies to become widely adopted by consumers, the problems of security and volatility would need to be addressed.
Maggie Brereton and Ina Kjaer, co-founders, EOS Advisory
Whoever answers this question right gets one million ripples. Digital currencies will be part of the currency scenario, banks and individuals will adopt them. But watch out for massive scams in the meantime.
Compiled by: Samuel Agini, Paul Clarke, Emily Horton, Dave Morris, David Ricketts, Fareed Sahloul, Bérengère Sim, Tom Teodorczuk and Ryan Weeks