Joseph Stiglitz, winner of the 2001 Nobel Prize in Economics, is of the opinion that cryptocurrencies should be “shut down.” While contending that digital payment systems are the way of the future, the economist does not believe that decentralized currency is part of this trend.
In a recent interview with CNBC, the author of the ‘Price of Inequality’ stated that electronic payment systems, coupled with a regulated economy can help central banks like the Federal Reserve in formulating their macroeconomic strategy. He added that this dichotomy can help curb “illicit activities,” pedaled by the cryptocurrency industry.
Stiglitz added that he was ‘disturbed’ by the overwhelming attention given to cryptocurrencies because of the industry’s dilution of transparency and emphasis on privacy and anonymity. In his words,
“It disturbs me a great deal the attention that was given to cryptocurrencies because those were moving things off of a transparent platform into a dark platform.”
Several channels of illicit financial activities like money laundering scams and frauds often debilitate the financial system and cause loss of global wealth. The economist’s remedy to make the economy more “efficient,” is to “move to more of an electronic payment mechanism.”
However, he contends that the key is to find the correct balance between transparency, spearheaded by regulation, and the absence of the “surveillance state.” A surveillance state encroaches on freedom and is one of the main reasons why decentralized currency was born, he argued.
Speaking with reference to the possibility of a digital dollar, which in the cryptocurrency world is the stablecoin, the economist stated that with the “stable” functioning of the US Dollar, cryptocurrencies are not the answer.
“We have a very good currency, so far, the currency has been run in a very stable way. There is no need for anyone to go to a cryptocurrency.”
The acclaimed economist concluded by stating that the “attributes” that one would confer to a “good currency” are present in the US Dollar and not in any cryptocurrency, following which he called for the “shutdown” of the $180 billion-dollar industry.