Former US Treasury secretary expects ‘a ton of innovation’ around stablecoins. During a special episode of the podcast of Circle’s co-founder and CEO Jeremy Allaire, “The Money Movement” last week, Summers said he anticipates more progress in the blockchain space but a global digital currency is still in its infancy. The comments came as part of a broader discussion on the current state of the global economy, the possibility of a global digital currency and the role of stablecoins in cross-border transactions.
Larry Summers adds “I’m sure there’ll be a variety of kinds of innovation, but I’d be kind of surprised, and, you know, I’ve been surprised many times before, if we got to some kind of global digital currency … in my lifetime,” he said. “I could be wrong, I think … we’ll see a ton of innovation that will work through stablecoins, and that will permit cross-border exchange with more with more ease.”
In Summers’ opinion, the case for cryptocurrency rests on three pillars, but two fail to make strong arguments in favor of the technology.
For one, it is unlikely that governments around the world will debauch traditional currencies to the point where people will no longer want to put money in them. He said he doesn’t “read existing currencies as being on their way to being demolished” just because central banks are finding it difficult to meet their inflation targets, under pressure from rising debts and the crisis caused by the pandemic.
“Second thing I think is that I don’t think crypto is going to be accepted as some kind of libertarian paradise,” Summers said.
Summers doesn’t think that there are people who believe that financial privacy, in terms of the ability to transfer money, is a fundamental human right.
Just a week after Summers’ remarks, the dollar-pegged cryptocurrency issued by the CENTRE Consortium, USDC, crossed $1 billion in market capitalization.
The stablecoin supported by U.S. dollars held by CENTRE, created by Circle and Coinbase, achieved the milestone less than two years after launching, though it trails the Tether stablecoin by some $8 billion, Circle announced Thursday.
On the topic of digital yuan, secretary Summers shares that China wants to control the lives of their citizens, including their financial lives. In his view, a system that lets citizens freely move wealth and resources out of a country is going to be a system that makes the government “deeply nervous”.
“And I think a system that is so restricted that it isn’t possible to do that isn’t going to be much of a global digital currency,” he said.
[image: Bermix Studio]