The Economist’s Swarup Gupta on Cash, Privacy and the Digital Future of Money

Joe Kornik, Director of Brand Publishing Editor-in-Chief of VISION by Protiviti

When I sat down to discuss the future of money for VISION by Protiviti with Swarup Gupta, a financial analyst with The Economist Intelligence Unit, I had a lot of questions: Will cash become obsolete, and when? What does it mean to transact in digital currencies? Will the U.S. dollar be devalued as a global currency of choice? What about crime — identity theft and, more important, the privacy of my transactions? The conversation did not disappoint, and Gupta was able to shed light on details that often are glossed over in conversations about the future of money. Here’s some highlights of our discussion:

  • Use of cash could decline to as low as 5% by 2030, based on observed trends around the world. It will be replaced by real-time payment systems, both private (think Venmo and Apple Pay) and public; some amount of crypto; and central bank digital currencies (CBDCs, a digital version of fiat currencies like the dollar or the euro).
  • Governments across the world are not shying away from digital currencies — in fact, they are keen to reassert their sovereignty over money by fully owning them, just like they do with fiat currencies now.
  • There are two types of CBDCs: retail and wholesale. It’s the wholesale CBDCs that are likely to enter in circulation first — they’ll be used for interbank payments and will essentially replace or reset the financial infrastructure of a country as it exists in pre-digitalization format, notably removing the need for clearing houses. This development will shorten the chain required when a currency is converted into another currency, leading to improved efficiency and reduced cost.
  • Retail CBDCs may follow, but they also raise important and difficult questions about privacy and anonymity — as well as pseudonymity, where a person may be using an anonymous handle to transact, but personal attributes, location and, of course, the transaction itself would still be visible to authorities.
  • What about the U.S dollar, which is the currency of choice in the majority of the world’s transactions? Could a “basket of currencies” (say, from the BRICS countries) affect it? Gupta explains that a basket is an alliance of currencies, and a strong alliance could potentially reduce the influence of the U.S. dollar — but the dollar will still “overwhelmingly dominate as a share of foreign trade over the foreseeable future,” Gupta says.

Of course, I asked Gupta about the future: Will the world be a better place, financially speaking, or will we long for the “good old days” of the 2020s? Hint: A lot of the “drudgery” of transacting will be gone and forgotten. I guess that’s a good thing.

Read the full interview here. For the latest content from VISION by Protiviti, subscribe.

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