Transcript
Okay, so returning to the street vendor example again. On that street in China there’s no currency involved, now is that the goal of FinTech Innovation to eliminate all physical currency? Or perhaps even government-backed currency altogether? If the latter, do you think that governments will just roll over and allow the control of their currency to be taken away?
Although people were paying with WeChat, the transactions were still backed by government-issued currency. What happens when this is not the case? Cryptocurrencies like Bitcoin are usually not government-issued, and even government-backed currency. Will governments be willing to allow the use of these cryptocurrencies within their borders? And possibly even adopt one of these currencies as one of their own?
Some nations have already announced that they would move to cryptocurrency in some form. For example, Venezuela launched a Petro cryptocurrency to help the country among international economic sanctions. But the Marshall Islands is the first country to launch a legal tender cryptocurrency meaning their new currency will be recognised as legal tender, real money. And will have equal status as their current currency, you’ve guessed it which is the US dollar. We told you, the US dollar has lots of power.
Even the name of the new Marshallese currency it’s called ‘Sovereign’ after all, is a statement about power. The name was chosen to emphasise the sovereignty of the country which has a history of colonisation, nuclear testing and resulting poverty. When discussing the controversial cryptocurrency the president said “This is a historic moment for our people, finally issuing and using our own currency, alongside the US Dollar. It is another step manifesting our national liberty”.
This switch will have a lot of implications and could be the start of a new age for money and finance. Interestingly, the International Monetary Fund and the IMF warned the Marshall Islands government about issuing such a cryptocurrency. They were concerned that the currency could be manipulated by crime syndicates and fraudulent business practices. The types of activities that have often been tied to cryptocurrencies. And also that foreign governments could cut financial aid to the Marshall Islands if they broke from the US Dollar as their own e-currency.
Okay so let’s stop and consider some important questions. Do you think that cryptocurrency and other FinTech solutions will ever be largely adopted by banks and governments? Or, will they lead to a de-essentialized future where banks and governments are less influential in these areas? Will TechFins take over the finance industry? And, will other countries adopt cryptocurrency as a legal tender?
