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Deutsche Bank predicts a future where crypto replaces fiat

Elliot Hill

Deutsche Bank strategists have made bold predictions for the next decade of finance, with an increasing focus on digital currencies.

In a new report titled ‘Konzept – Imagine 2030’, the bank details a series of futuristic concepts which analysts believe may be on the cards in the next decade – although Deutsche Bank is quick to remind readers that its predictions aren’t a “perfect crystal ball”.

The end of fiat money?

Jim Reid, strategist at Deutsche Bank, provided the first chapter for the report called “The end of fiat money?”, where he discusses a world where the “fragile” fiat system has failed and crypto has taken its place.

Pointing out that fiat in its current form has only existed since the 1970s, Reid highlights that all fiat currency in circulation today is based on government trust.

However, the report claims that it’s politically tempting to print money to meet government needs in tough economic times, thereby increasing inflation and affecting the purchasing power of certain currencies. As a result, trust in the fiat monetary system is eroding.

With cryptocurrencies, which are usually made to be deflationary, this is impossible. Reid compares this to traditional national currencies backed by precious metals such as gold or silver.

Reid predicts that the fragile forces that uphold the current monetary system may begin to unravel in the next decade, which would see a greater demand for alternative currencies such as crypto or gold.

Crypto: 21st century cash?

The second feature in the report to focus on cryptocurrencies is written by Harvard economics expert Marion Laboure, who discusses a growing global focus on cryptocurrencies for payments.

Laboure says that whilst cryptocurrencies have existed for some years, they have yet to take off as a meaningful payment method, which has prevented them from becoming a substitute for global money.

Citing the benefits of cryptocurrencies over traditional cash, Laboure writes:

“They [cryptocurrencies] have not managed to take off as a means of payment despite their well-known benefits, such as security, speed, minimal transaction fees, ease of storage, and relevance in the digital era.”

Nevertheless, Laboure agrees with Reid that this may change in the coming decade. Looking to the future, the report says that currencies like Facebook’s Libra may gain traction in the next few years.

Discussing the likelihood of a global payments cryptocurrency, Laboure states:

“As we look to the decade ahead, it would not be surprising if a new and mainstream cryptocurrency were to unexpectedly emerge.”

Deutsche Bank has recently become one of the first major European banks to join JP Morgan’s blockchain network, and has expressed its interest in blockchain technology multiple times.

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