Book review a glorious future for money

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Book review a glorious future for money

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Bibliographic details

• Authors: JON FROST
• Published: September 2, 2021

Publication and bibliographic details

• Review title: Book review a glorious future for money
• Reviewer: JON FROST, head of innovation and the digital economy in the Monetary and Economic Department at the Bank for International Settlements.
• Reviewed book: The Future of Money: How the Digital Revolution Is Transforming Currencies and Finance
• Author of book: Eswar S. Prasad
• Publisher: Belknap Press, Cambridge, MA, 2021, 496 pp., $35.00
• F&D Magazine, September 2021
• Read time indicator on page: Less than a minute(0 words) Read

Key findings and syntheses from the review

• Scope of digital disruption
  • Digital technologies are disrupting money itself, not just peripheral financial services.
  • Fintech has already produced large impacts including the dramatic growth of mobile money in East Africa and China, the emergence of peer-to-peer lending, and microinsurance.
  • Fintech has included hundreds of millions of new users in the financial system—particularly in emerging market and developing economies.
• Cryptocurrencies and distributed ledger technologies
  • The review describes Bitcoin, Ethereum, and the distributed ledger technologies underlying them.
  • There is noted disappointment around their actual use in payments to date.
• Central bank digital currencies (CBDCs)
  • CBDCs are presented as one of the most far-reaching innovations.
  • Potential benefits listed:
  • Could serve as a backstop to privately managed payment systems.
  • Further enhance financial inclusion.
  • Improve monetary policy transmission.
  • Help fight corruption.
  • Potential risks listed:
  • Bypassing of banks.
  • Loss of privacy.
  • Orwellian oversight of citizens by authorities.
  • Mitigation: Risks can be mitigated through proper design and legislative oversight.
• Breadth of coverage in the book
  • Sweeping overview of developments in payments, from specifics of Ant Group’s business to the e-krona project and Venezuela’s Petro.
  • Includes anecdotes such as ABBA singer Björn Ulvaeus’s battle against cash in Sweden and a quoted dismissal of regulatory sandboxes by Maria Vullo: “Toddlers play in sandboxes. Adults play by the rules.”
  • Discusses implications of fintech and CBDCs for cross-border payments and the role of the US dollar as a reserve currency.
• Genre and comparative context
  • The Future of Money is positioned alongside Felix Martin’s Money: The Unauthorized Biography and Lana Swartz’s New Money.
  • Emphasis that the design of money is not merely technical but a deeply important societal issue.

Policy implications and recommendations emphasized

• Issuance and non-issuance of CBDCs are both conscious policy actions.
• To make the right choices, a broad dialogue with a well-informed public is key.
• Proper design and legislative oversight are necessary to mitigate the risks associated with CBDCs.

Additional reviewer and publisher notes

• The review is written by JON FROST of the Bank for International Settlements.
• Opinions expressed in articles and other materials are those of the authors; they do not necessarily reflect IMF policy.
• The views expressed here are those of the author and not necessarily those of the Bank for International Settlements.

Source: IMF F&D Magazine page — Book review a glorious future for money (September 2021).