Joseph Eugene Stiglitz, a prominent American economist and the recipient of the Nobel Memorial Prize in Economic Sciences (2001), has argued that the existing financial system would become more efficient if electronic payments were used to settle most transactions.
Stiglitz, who has received more than 40 honorary degrees from prestigious universities including Cambridge and Harvard, believes the world’s financial system and the global economy would be “better regulated if all the data [was accessible] in real-time.”
Using Real-Time Data To Improve The Economy
Stiglitz noted during an interview with CNBC that by analyzing real-time data, we would be able to learn about people’s spending habits and having access to the latest financial information would also help the US Federal Reserve in more accurately determining interest rates.
He added that the availability of the latest financial data would allow for “better macroeconomic management.” According to Stiglitz, an electronic payments system and access to real-time financial data would help prevent "illicit economic activities.”
Cryptocurrencies Moving Monetary Transactions To A "Dark Platform"
However, the former chief economist at the World Bank said “it disturbed [him] a great deal [when] cryptocurrencies” were given a lot of attention. Notably, Stiglitz thinks cryptocurrencies are moving the world’s financial system “off [or away] from a transparent platform and into a dark platform.”
We know about the role of real estate and money laundering. We know from the Paradise Papers, Panama Papers...the extent of this money laundering. We know from research in recent years, [from] the work of [French economist] Gabriel Zucman … the large percentage of global wealth that is held in these dark havens. So, if we want a more efficient economy without these illicit activities, I think we’re going to have to move to more of an electronic payments mechanism.
Stiglitz further mentioned that “we will have to figure a way out to have the transparency of an electronic payments mechanism without the dangers of the surveillance.”
“There’s No Need For Anybody To Go To A Cryptocurrency”
When questioned about whether the USD should also become the world’s electronic reserve currency, Stiglitz said:
[The USD] is a very good currency…[it] has been running in a very stable way. There’s no need for anybody to go to a cryptocurrency. In our standard courses in Economics, we talk about the attributes of a good currency and the USD has all those attributes. Cryptocurrencies do not have those attributes.
Stiglitz also recommended “shutting down” cryptocurrencies.