Deutsche Bank: Fiat Payments Will Be Outdated In 2030

One of the most influential banks in Europe, the German Deutsche Bank AG (DB), published a report from its research team, boldly dubbed “Imagine 2030”. Тhe 84-page magazine-styled research paper covers various topics, such as Europe’s fall behind other economies, the end of fiat money, as well as for cryptocurrencies as the 21st-century cash.

The magazine implies that factors, holding the traditional fiat monetary system since the end of the U.S. Dollar gold-backing in the seventies, are becoming weaker and weaker. Indeed, the de-linking fiat national currencies from precious commodities backing is the core of Deutsche Bank’s arguments. The Bretton Woods monetary system backed every unit of currency with physical gold and/or other sterling metals.

However, the fact the new fiat monetary system does not have any form of backing leads to problems like currency dependency and inflation. Governments can now print as much money they need to sustain their economies, thus creating even more significant inflation. According to the report, society has rarely felt inflation as they felt it in the seventies and eighties. In the 50 years the fiat monetary regime roams around the world, “a fortuitous set of global factors still hold the financial system alive, not governments. The factors created strong market disinflationary forces, which act on global markets around the clock.”

Central banks, on the other hand, remain calm and even cut interest rates to push out more money on the market. The European Central Bank (ECB), for example, announced on December 12th, 2019 that their interest rates would likely stay the same or lower. ECB considers this rate to be 2% - the same as the recorded inflation in both the United States and Europe.

Deutsche Bank’s research team also noted the global shift towards cryptocurrencies and distributed ledger technologies (DLTs). With China altering its stance on cryptocurrencies and preparing to launch a digital yuan, the world’s largest economy may become the first global force to shift the paradigm of traditional finance. India also prepares for a shift towards the crypto sector, as recently Indian government panel pitched the idea of implementing an official digital currency, which would be regulated by the Reserve Bank of India.

On the consumer side, Deutsche Bank noticed digital payments became a preferred way for consumer shopping. More and more retailers include online payments, virtual POS stations, and even crypto wallets. The research paper shows over 60% of the total number of consumers prefer to interact and shop with a dematerialized form of cash instead of sticking to the traditional fiat workflow.

Deutsche Bank also saw an increase of blockchain wallets created, meaning continuing adoption of cryptocurrencies and the technology beneath them. In 2019, DB recorded around 75 million total blockchain wallets. The research predicts the total amount of wallets to surpass 100 million by 2022 and over 200 million in 2030. Internet users are exponentially increasing too, with an estimate of 2,5 billion people would use the Internet.

The future of cryptocurrencies, however, “lies within strong alliances with key stakeholders, such as Google Pay, AliPay, Visa, Amazon, and so on.” DB concluded that in the decade ahead, the birth of a new super-crypto, like Bitcoin, is likewise to happen, and government-issued digital currencies are the way to go for countries with strong banking sectors, such as Germany, the United Kingdom, and Switzerland.