Joseph Stiglitz, Nobel Prize-winning economist recently said that the U.S. should phase out fiat currency and move toward digital currency, at the World Economic Forum’s Annual Meeting in Davos, Switzerland.
Speaking in the session called Ending Corruption, Stiglitz said that phasing out money and introducing digital currency has ‘benefits that outweigh the cost,’ in the long term.
He states by saying:
You can put it into the context of one of the big issues being discussed here in Davos this year is the backlash against globalization, the darker side of globalization. The lack of transparency in global financial markets [and] the secrecy havens that the Panama Papers exposed, just reinforced what we already knew has meant that there is a global framework for both corruption and tax evasion and tax avoidance.
He adds that it is down to these secrecy havens that people are more likely to engage in these activities where they can enjoy the economic returns they receive. However, if these secrecy havens didn’t exist then the benefits linked to these activities would be greatly reduced, Stiglitz states.
One of the country’s that hasn’t done its job in fighting corruption is the United States, according to Stiglitz, and believes that one potential remedy is to phase out fiat money and introduce digital currencies.
I believe very strongly that for country’s like the United States we could and should move to a digital currency and get rid of currency. There are important issues of privacy [and] cybersecurity, but it would certainly have big advantages.
Yet, while there may be transitional issues, Stiglitz believes that in the long term it’s a move in the right direction.
Despite his recent views on phasing out fiat currency and introducing a digital currency such as bitcoin, in the past Stiglitz has not always been in favor of the currency, once stating that bitcoin has been ‘shut down’ by the U.S. government.
When asked a question on his opinion of bitcoin at a public event at the London School of Economics in September last year, Stiglitz replied that:
The main use of bitcoin has been to circumvent tax authorities and regulation. I think the US government did the right of thing of shutting or trying to shut it down and I think effectively…it has done that.
Yet, despite his limited view on bitcoin at the time of this quote, he now appears to be in favor of digital currencies such as bitcoin. Not only that, but his slamming of the International Monetary Fund (IMF) in the past for its part in crises faced by economies around the world could illustrate that he is against the banking setup and keen to see physical currency phased out.
He, however, is not the first to embrace the introduction of a cashless society.
Harvard professor and economist Kenneth Rogoff said on CNBC last year that cash provided the ideal avenue for tax evasion. In order to tackle tax evasion and illicit activities, he believes that the amount of physical cash around the world needs to be reduced.
Indian Prime Minister Narendra Modi has already removed 90 percent of his country’s currency from circulation with the removal of Rs 500 and 1,000 notes, to curb tax evasion, corruption, and terrorism.
While the move may have caused panic to begin it helps to open the door to bitcoin, which makes sense in the digital world we live in.
Featured image from Wikimedia.