Deutsche Bank believes that cryptocurrencies could replace Fiat currencies like the euro by 2030 as the “forces that hold the Fiat money system together” dissolve.
This writes the 149-year-old company in a recent report – just a week after the news that Germany’s financial institutions are likely to trade with crypto by 2020.
Deutsche Bank’s research report “Imagine 2030” offers 24 “contrary ideas” that could be implemented worldwide over the next decade – from the assumption of a six-hour working day to the more recent “on-demand” life, where a refrigerator becomes autonomous detects a lack of milk and orders a fresh load.
The case of Fiat currencies
The report mentions what many would never have expected from a bank – the potential end of Fiat currencies.
German bank analyst Jim Reid argues that since the decoupling of the dollar from gold in 1971, Fiat has been a kind of arcane experiment – stabilized not by the management of central banks, believe it, but by happy events such as China’s entry into the US global job offer. He writes:
“That this current Fiat system has survived so long required a fortuitous array of global forces over several decades that created significant natural, compensating disinflationary forces.”
However, central banks may now lose track. According to Reid, population aging is likely to lead to higher labor costs worldwide, which in turn could lead to inflation rates skyrocketing far beyond the scope of state control.
In this conceivable catastrophic scenario, the “multi-trillion dollar or bitcoin question”: Can Fiat compete with alternatives such as crypto and gold as a working currency – or not?
“The forces that held together the current Fiat system are now fragile and could dissipate in the 2020s. If so, it will lead to a backlash against fiat money and the demand for alternative currencies such as gold or crypto could rise. “
Krypto: “Cash of the 21st Century”
The report confirms the vision of the crypto community of an alternative monetary system. However, despite its flattering description of crypto as “21st Century Money,” the bank does not mention the basic crypto value propositions.
“Security, speed, minimal transaction fees, simple storage and relevance in the digital age” are mentioned – some of which were historical vulnerabilities for Bitcoin, Ethereum and other top cryptocurrencies. However, essential aspects such as supply shortages and systemic transparency about the blockchain are not mentioned.