Digital Currencies Could Replace Low-Interest Bank Accounts, Says UN Expert

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, 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.

The Bank of England, for example, is actively reviewing taking interest rates into negative territory, meaning savers would pay the banks to hold money in their bank accounts.

According to Buonomo, interest rates were the one remaining killer app for bank accounts.

"Those who are going to suffer the most 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.

In contrast, digital currencies, "Allow you to hold digital money, it lets you pay the bills, use the mobile phone without credit cards, with no fees to credit card processing companies and no fees to banks for money transfers," he said.

Of course, there remain questions on what type of digital currency could replace the ubiquitous bank account.

Digital currencies issued by a central bank were the real alternative, Buonomo argued.

The question is whether central banks rely on commercial banks to distribute money, just as the Digital Dollar Foundation proposed last week, or go more radical and issue funds to private citizens directly.