The Future of Money
Book

The Future of Money

How the Digital Revolution Is Transforming Currencies and Finance

Eswar Prasad
Belknap Press, 2021
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Recommendation

Cash as a means of exchange is disappearing fast. And yet fiat currencies are in no danger of extinction, economist Eswar Prasad reports in this clear-eyed take on cryptocurrencies and fintech. Electronic payments of dollars, euros and yuan – not bitcoin and ether – are replacing paper money. Prasad strikes just the right balance in this useful analysis: He understands the technology well enough to explain mining, halving and other crypto creations to neophytes, but he also details the many pitfalls inherent in the crypto boom. This study of money’s present and future cuts through the hype and offers readers a valuable perspective.

Summary

Cash is declining in importance nearly everywhere.

Sweden is home to the world’s first central bank, but it also might be the first nation to see paper money become extinct. A Swedish central banker predicted in 2018 that the physical krona could disappear by 2030. The cashless future isn’t confined to the Nordic nations. In China, electronic payments via phones have mostly replaced transactions conducted in paper yuan notes. Central banks and national treasuries are beginning to experiment with digital currencies, as evidenced by The Bahamas’ launch of a government-backed digital currency in 2020.

The rise of bitcoin accelerated the looming disruption in money and finance. Bitcoin was launched in 2009, and its value has rocketed from less than $500 per coin in 2015 to $20,000 in 2017, and it crashed before soaring to $60,000 in 2021. Bitcoin promised an era of efficient, frictionless payment systems. While the bloom is off that particular rose, some of the world’s largest tech companies have taken note. Facebook and Amazon have begun experimenting with their own alternative currencies. In China, Ant Group, the financial arm of e-commerce...

About the Author

Eswar S. Prasad is a senior professor of trade policy and a professor of economics at Cornell University. He is a senior fellow at the Brookings Institution and a research associate at the National Bureau of Economic Research.

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