Saad Ullah
Long Live The Cash
According to the report, Bitcoin and other cryptocurrencies are too volatile in nature to take over cash. The inherent instability may be seen by enthusiasts as a mean to increase their wealth, but ultimately, the same up and down movements are will be their demise.
The report said that the Germany based international investment bank had conducted a survey of its clients across the globe that had a multitude of questions on different financial topics. A finding of the survey by Deutsche Bank is that the world will ultimately shift towards a complete cashless society. According to the bank, different financial and governmental institutions from around the world are working towards this move. While cryptocurrencies may be truly paperless, fiat will still rule and the move from paper based to virtual fiat will be the logical way.
The report also goes to say that in times of economic upheaval and looming uncertainties, the public has a tendency to prefer cash,
Over the centuries, people have developed a deep-rooted trust in paper and coins during uncertain times. Today is no different. For example, the trade war between the U.S. and China has led notable investors to increase their cash holding. Our survey shows that people also like cash because it allows them to more easily track their spending.
The Crypto Threat
The report by Deutsche Bank has made particular jabs at cryptocurrencies, specifically Bitcoin. The volatility being number one reason why Bitcoin will, according to the bank, never be a true store of value. On the other hand, the report does recognize the impact cryptocurrencies have made in the last decade of their existence. In the report, the bank says,
In this report, we argue that cash is unlikely to disappear anytime soon. However, a real digital payment revolution has been underway for the past ten years. Cash is losing ground as a payment method. Several countries have recently removed large notes worth $100 or more and implemented policies to replace traditional payment methods with digital solutions. In the midst of these changes, non-sovereign cryptocurrencies pose a threat to political and financial stability.
Deutsche bank states that the future of cryptocurrencies largely depends on the adoption in developing countries with large populations. Specifically India and China. Both the Asian giants have encouraged the use of digital payments. However, with the ban on cryptocurrencies in India and its ongoing legal battle, the future of cryptos will be heavily dented if the second largest country by population’s legal system upholds the ban by the state bank, Reserve Bank of India.
China, on the other hand, is actively developing its own blockchain based central bank digital currency (CBDC). A think tank has also saidthat the use of a digital Renminbi will erode the importance and dependence on banks and the American based SWIFT network. Deutsche Bank has also mentioned the threat the use of a decentralized currency will hold for United States Dollar, the de facto leader when it comes to cash,
China is working on a digital currency backed by its central bank that could be used as a soft- or hard-power tool. In fact, if companies doing business in China are forced to adopt a digital yuan, it will certainly erode the dollar’s primacy in the global financial market.
Saad Ullah
