Post-2008, many countries, including Switzerland, have expressed the challenges that increased US compliance, coupled with the dollar being used as the global reserve currency, has presented to the banking industry. If countries were to issue digital currencies, they could theoretically settle transactions directly without another (intermediary) currency involved. Another country I am watching closely is India which has banned banks from banking crypto-related companies but has been public about exploring a digital rupee.
Just last month Binance, one of the largest cryptocurrency exchanges by volume, announced a stablecoin called Venus that will offer stablecoins pegged to fiat currencies. As their announcement states,
“Binance welcomes additional government partners, companies and organizations with a strong interest and influence on a global scale to collaborate with us to build a new open alliance and sustainable community.”
This infrastructure could help smaller countries issue their own digital currencies, tradeable on the Binance exchange (with access to a global market) without having to create a system from scratch.
It’s clear that there is a growing appetite for these digital currencies, and as the operational infrastructure to support this idea grows, so too will the number of sovereign digital currencies on the market. These digital currencies, and eventually all cryptocurrencies, will take mindshare from today’s traditional fiat currencies, completely remaking the financial system as we know it today.
Such a change is vital to GDP growth, and, as such, all nations should cooperate in the challenge ahead: creating alternatives to the banks, stock exchanges and other institutions built in previous centuries when intermediaries were necessary. We’ve seen Netflix disrupt the movie industry, and Amazon the e-commerce and content distribution markets. Our international monetary institutions could be next.
Jalak Jobanputra is founding partner at Future\Perfect Ventures.
