‘Expert in complexity and uncertainty.’ This is how Bert Slagter describes himself. The Dutchman operates at the intersection of technology and economy, two worlds that do not touch each other enough and do not yet know each other well enough. In his book ‘Our money is broken’ he also pleads for a radical new money system, in which bitcoin will play a central role. Bloovi talked to Bert Slagter about crypto money, about the role of the bank and about the digital euro that Europe is breeding.
“The core message of my book is that our money system as it is organized today is only limitedly suited to a digital future,” says Slagter. “My son plays Minecraft or Fortnite with people from all over the world. For him, it goes without saying that you have digital assets that you send to, say, Japan.”
“All kinds of parties are working on the money of the future. Not only governments through their Central Banks, but also technology companies. Although that is difficult, just think of the Libra, Facebook’s digital currency that has since been buried. Then of course there is open source money. The most commonly used form is the stablecoin, which represents the value of the euro, the dollar, the yen, ….”
Our money system as it is organized today is only limitedly suited to a digital future
“We mainly speculate with cryptocurrency, but millions of people worldwide use it to save or to send money abroad. I am convinced that there is a need for a decentralized variantto money that is not under the control of the Central Banks or the tech giants, but that is controlled and shared by all of us.”
Will cryptocurrency become mainstream?
If the need is so great, why does it take so long for cryptocurrency to become mainstream, according to Slagter? “The innovators and the early adopters are fine with tech being a bit rattled. It is waiting for the majority. They will only use tech when it is better and cheaper than the alternatives. Just look at how long it took for the electric car to become mainstream.”
“In Belgium and other Western countries, we generally have a reliable government, a stable currency, and excellent payment infrastructure. The alternative cannot compete with that. The majority therefore sees no reason to use cryptocurrency yet.”
“For billions of people living in a dictatorship, with an unstable currency, sky-high inflation, censorship, … it is different. We are already seeing mass adoption of cryptocurrency in specific countries and situations. There are 200 million users worldwide those are certainly not all innovators and early adopters who speculate with cryptocurrency.”
The digital euro
Europe is now working on a digital euro. Slagter is curious how that experiment will turn out, but is not a believer. “There is no digital form of the euro that is public today. Digital money that you use to pay, save, invest, etc. is issued by your bank. A private bank, not a Central Bank. That is why Europe is thinking of such a public digital euro, issued by the government. It is actually an electronic form of cash. In the summer, a concrete proposal should be put on the table about what such a digital euro could look like.”
“In theory, such a digital euro could become something beautiful, almost utopian. A digital euro can be a safe, neutral and privacy-friendly alternative to the euro we have today, with public payment infrastructure that – like the highways today – criss-cross the whole of Europe. The digital euro is also an opportunity to reform the entire financial system.”
If you have a safe public alternative to the digital euro, then the responsibility to protect money is no longer solely with the banks and they can take more risks and do more
“Banks have to comply with an incredible number of rules. They are allowed to take few risks and their entrepreneurial skills are limited. As a result, the entire financial system is frozen. If you have a safe public alternative, then that responsibility to protect money no longer lies solely with the banks and they can take more risks and do more.”
“But of course the banks fear that customers will move their savings to that safe alternative and will therefore apply the brakes. In the Netherlands, banks are already saying that the digital euro should not become a means of savings. Other players also set all kinds of preconditions that erode the digital euro. That’s the paradox.”
If the digital euro becomes too successful, the existing system will collapse
“If the digital euro becomes too successful, the existing system will collapse. But if he’s not successful enough, you don’t have a network effect and he fails. Therefore, I do not believe that the digital euro will really make a difference. Either you make it, but then you make it good. If it just becomes an alternative somewhere in the margins, you shouldn’t start it.”
Crypto as an alternative
If Europe nevertheless continues with the digital euro, Slagter sees an important role for decentralized money. In any case, the digital euro will be issued centrally. It’s government money. Today that risk is small, but what if such a government ever imposes restrictions.
What if she suddenly decides that you cannot buy hamburgers with your digital euro because your BMI is too high? “You never know what will happen in crisis situations. Everything becomes fluid under pressure. I do not think that the government should have a monopoly on digital money. It’s always good to have several options. Stablecoin, bitcoin, ethereum, … must continue to play that role.”
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