Low Interest-Rate Bank Account Could be Replaced by Digital Currencies

According to Massimo Buonomo, a United Nations global blockchain expert, in an interview stated that digital currencies, particularly financial institution digital currencies, could soon “eliminate the necessity for a bank account” altogether.
Speaking on a web panel discussing the longer-term post-coronavirus global economic order on Thursday, Buonomo said banks and credit cards have long enjoyed a duopoly on digital payments, but the arrival of digital currencies means users could sidestep them entirely.
Low-interest rates, enforced by central banks to encourage more borrowing, may expedite the method, he said, as they incentivize account holders to search for returns elsewhere. 
According to Buonomo, interest rates were the one remaining killer app for bank accounts. But they’re in peril of becoming obsolete within the face of digital currencies, which may process electronic payments even as easily.
“Those who are getting to suffer the foremost [from digital currencies] are the MasterCard processing companies and therefore the banks because, within the current rate of interest environment, your [only] advantage of getting a checking account is that it enables digital payments,” he said.
Massimo is the UN’s resident expert on fintech and, latterly, blockchain and cryptocurrencies, for nearly 10 years. During his tenure, the world organization has begun a series of crypto-related initiatives, like sending aid to Syria via Ethereum and enabling crypto donations for UNICEF.
On Thursday’s panel, Buonomo said banks remain susceptible to hacks and, alongside MasterCard companies, they add friction by charging transaction fees.
In contrast, digital currencies, “allow you to carry digital money, it allows you to pay the bills, use the mobile without credit cards, with no fees to MasterCard processing companies and no fees to banks for money transfers,” he said.
However, there remain questions on what sort of digital currency could replace the ever-present checking account. During a March interview with City AM, Buonomo argued bitcoin and ether, two public cryptocurrencies that enjoy widespread adoption, had a fighting chance in becoming alternatives to fiat currencies.
But on Thursday, he took a more measured approach, saying tech limitations and privacy implications mean most public blockchains are widely unsuited for a national digital currency. Regulators would wish overarching control over the system, he said, and lots of public blockchains don’t have the throughput required.
Digital currencies issued by an Apex Bank were the important alternative, Buonomo argued. The question is whether or not central banks believe commercial banks to distribute money, even as the Digital Dollar Foundation proposed last week, or go more radical and issue funds to non-public citizens directly.
The “tier-1 model” would be the “most disruptive,” he said, and even as feasible. Central banks could piggyback off the subtle Social Security systems that are widespread within the developed world to distribute currency to “those who need it most,” like the disabled or the registered unemployed.
Looking at it in a more realistic way, Social Security systems could become the issuance model for the central banks, Buonomo suggested.