The CEO of American Express believes that crypto is similar to gold in value and impact on the economy. At the same time, however, he believes that due to certain limitations, cryptocurrencies may never replace traditional means of payment in the economy.
The CEO of American Express, Stephen Squeri, made these known when he spoke with Yahoo! Finance about the rise of cryptocurrencies and what they mean for the modern economy. Squeri said that he viewed cryptocurrencies like gold but that the inherent volatility disqualifies them from being successfully deployed as legal tenders or a store of value for an entire country. According to Squeri, another major turn-off is that cryptocurrency holders are not given certain rights and rewards that are essential to the success of any financial system. Squeri then said that American Express would therefore not be launching any crypto-linked credit card in the future.
Although Squeri believes that cryptocurrencies may not replace traditional payment systems, he revealed that American Express has explored stable cryptocurrencies and that they are looking towards the innovative central bank digital currencies (CBDCs) that are set to rival cryptocurrencies for the adoption of digital payment systems.
Cryptocurrency and Traditional Payment Systems
The idea of a digital payment system is not new; since the early days of computer science and cryptography, there have been predictions about a future digital payment system that could totally eliminate the need for physical cash. Although cryptocurrencies only began to blossom after 2010, the industry has been building momentum for decades now.
The innovativeness of digital payment systems brings certain challenges to traditional economic systems. The most important are decentralization, regulation, and stability. Cryptocurrencies are built on decentralized blockchains and are therefore not subject to any centralized control. The issue of economic control is a point that governments are always unwilling to concede because the entire stability of any nation rests on the government being able to control the economy.
The concern that traditional payment systems may be negatively affected by the adoption of cryptocurrencies has now led to strong anti-crypto policies and a fast-growing drive for regulation. Governments are seeking the best way to navigate the unavoidable cryptocurrency proliferation and chart a course that benefits everyone. It has not helped that the crypto market is highly volatile and therefore offers no promise of relative price stability; a factor that is important to governments.
The general response is the growing interest in CBDCs which are seen as generally safer and more convenient for traditional economic systems, offering the thrill and benefits of digital payment technology without the associated risks of decentralized digital tokens. The interest in CBDCs development is rapid. China launched its CBDC, the Digital Yuan in August, and just yesterday, Nigeria also launched its CBDC, the e-naira.
Like Stephen Squeri, a lot of business owners are wary or undecided over the impact of cryptocurrencies on the economy but it is safe to say that they will choose the safest system that offers security and stability.
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