Nouriel Roubini, also called Doctor Doom, is at it again. In a new article written on The Guardian, he gives his opinion about central bank digital currencies. He thinks that these type of currencies have the potential to kill bitcoin. This article comes as a natural discussion when even big bankers like Christine Lagarde are talking about this new kind of currencies.
Nouriel Roubini Takes On Central Bank Digital Currencies
The issue about central bank digital currencies is now in the headlines of fintech publications. For some, they are the natural evolution of normal currencies. Nouriel Roubini thinks that this kind of instruments will be key to slash cryptocurrencies. In his new article written on The Guardian, he states:
“If a CBDC were to be issued, it would immediately displace cryptocurrencies, which are not scalable, cheap, secure, or actually decentralised.”
Indeed, the simplicity and quickness of direct connections with central banks will outpace the transactional times of the actual cryptocurrencies. It seems like there is just a matter of time before these currencies take an important spot. More so when countries like China and Sweden are almost going cashless. This kind of currencies would help to support that cashless society while bridging it with central banks.
However, there are problems with this system too: it would displace the important part that commercial banks fulfill in the actual monetary system. According to Roubini,
“the fractional-reserve banking system will be replaced by a narrow-banking system administered mostly by the central bank. That would amount to a financial revolution – and one that would yield many benefits. “
This would mean that the central banks would have more control over the direction of money and would be able to curb crimes like money laundering and terrorism funding.
The Issue: Privacy
But Nouriel Roubini seems to ignore the main advantage of cryptocurrencies: the pseudo-anonymous characteristic of transactions in its network. This is something that will worry some people. However, he discusses that
“transactions could also be made anonymous, with access to account-holder information available, when necessary, only to law-enforcement authorities or regulators, as already happens with private banks.”
but for some that would not be sufficient.
It seems that even in the event of the adoption of central bank digital currencies, the main use case for cryptocurrencies would not disappear. Instead, it could take a greater importance with central banks running all deposits and withdrawals. This is not a good thing for cryptocurrency enthusiasts and people that wish uncensorable money. So, the demand for alternate currencies will always be there.