Daily Management Review

Deutsche Bank: Cash Will Disappear in 10 Years


According to General Director of Deutsche Bank John Cryan, development of digital technology will soon lead to disappearance of cash from circulation.

During a panel discussion 'The Transformation of Finance' organized by the Davos forum, head of the Germany's largest private bank said that most likely, cash would give way to digital currency in the future.

In particular, head of Deutsche Bank noted that paper money "need to dematerialize." According to him, digital money are easier to keep track on, and "it would in principle be better if we could monitor everyting."

Thus, the main advantages in the development of digital money, according to Cryan, are: higher efficiency of transactions, increased security (in fact, attaching particular money to a particular person) and ability to control their movements.

The discussion about the future of money and the financial sector was also attended by other representatives of the Western financial elite, such as CEO of Morgan Stanley James Gorman, CEO of PayPal Dan Schulman, Chairman of Zurich Insurance Group’s Board of Directors Tom de Swaan and IMF Managing Director Christine Lagarde .

"Financial sector companies have to adapt to the changes one way or another. We have to admit that there is a certain risk that we can lose our traditional banking services position as a link in the process of making payments or become simply unnecessary, because we couldn’t catch up with development of payment technologies. To a certain extent, we still remain under protection of legislation and regulatory compliance, for example in terms of clearing. PayPal, for example, may carry out a transaction with a fairly large sum, but ultimately, clearing is fairly tightly controlled, especially in the US.

In addition, payments from one bank to another are made quite often. In this regard, banks are still relevant. If you look at the brokerage business of many banks, we see that there have occurred some serious technological changes. We do not sell paper money, we pass electrons. The process of trade has been dematerialized and the banks quite successfully coped with these changes.

Will the paper money be in future... We are spending a lot of time to study the issue. I believe that after 10 years, cash will go out of circulation. Paper money will not be necessary. They are inefficient and very expensive.

In this respect, it seems to me, Blockchain technology is quite interesting. It is the technology itself, rather than as Bitcoin currency. I think in the future, this technology could be used for the purpose of digital identity. Its implementation on a global scale will require the consent of G20. This is likely to be something like a supranational project.

Overall, if we look at the money, they are used as a medium of exchange. However, we also share other things that are not in cash, including Bitcoins. This is just another mean to barter. We see that Bitcoin is often used for illegal purposes, and still not widely used. As a currency, it is also a bit difficult to use, and people will repel such complexity. Money is also used as a means of savings. Yet, Bitcoin quotes are very volatile, it is not very reliable and not very liquid. There is only a limited number of Bitcoins, and they should be split into small pieces to use them.

Again, we have a lot of thinking on the question of the future of cash. I believe that it should be dematerialized. In my opinion, the current technology can make it. I think the authorities will be interested in it. There is a reason in the proverb "A counterfeiter’s best friend is a 500 euro banknote". This is a fairly large sum of money that can be faked, and after all, paper money are anonymous money. I believe that it would in principle be better if we could have all monitored.

One problem here is that many people are carried away by the technology itself. We have to talk from a practical point of view. We do not plan to develop a technology of new money on our own, these things are quite complicated. However, we are working in this direction with other companies. And we are looking for convenient ways to use new technologies. I am sure that technologies like Blockchain can be applied in addition to using Bitcoin. The idea is that it is actually protected by a unique identifier, and we can find a use for them in the future. "

source: ndtv.com