The Future As Seen By Central Banker
�There is no reason
products and services could not be swapped directly by consumers and
producers through a system of direct exchange -- essentially a
massive barter economy. All it requires is some commonly used unit
of account (trade dollars) and adequate computing power to make sure
all transactions could be settled immediately. People would pay each
other electronically, without the payment being routed through
anything that we would currently recognize as a bank. Central banks
in their present form, would no longer exist -- nor would money.�
-- Mervyn King, Deputy Governor,
Bank of England
Mr. King made the above
comments at a conference of international bankers in Jackson Hole,
Wyoming, August 1999. The meeting was sponsored by the Federal
Reserve Bank of Kansas City, Missouri. (As reported in
BarterNews Issue #50.)
Ruminating on the potential impact of electronic commerce on the
future stability and structure of the global financial system, his
conclusion was as startling as it was original. �The successors to
Bill Gates,� he predicted, �will put the successors to Alan
Greenspan out of business.�
In short, the pace at which the electronic economy is developing
is making many traditional jobs, corporations, and institutions
obsolete...at a speed few people could have imagined. And there is
little reason to assume central banks are immune to the process.
King said the internet poses challenges to many institutions, but
the thing it does most radically is change the way goods and
services are exchanged. Companies such as eBay or Amazon.com have
devised new and different ways of delivering products to consumers.
However, the ultimate means of exchanging goods is through the
mechanism of money itself, and it is money that will soon be
challenged by the Internet.
Already the trend is for decreasing the number of different types
of money in the world...Europe is abolishing some currencies. While
in South American countries they are discussing doing the same by
adopting the dollar as their currency.
The idea of national currencies is fading faster than anyone
imagined, which is one reason currencies are quickly consolidating
into larger and larger blocks.
The World Wide Web means that people shop across borders...not
only when they travel, but every day. That is encouraging consumers
to think in terms of several different currencies simultaneously,
and it will create a demand for a more global currency than anything
that presently exists.
It also creates space for new currencies to emerge. There have
already been proposals for different types of electronic money.
And there is no reason anyone working online should not be paid
in an electronic currency, which might then be accepted in exchange
for goods or services...or converted back into dollars, euros or
The electronic economy will consequently create a demand for a
more global currency than anything that exists now. Most likely it
will be one of the existing big currencies such as the dollar or
euro (probably the dollar) than any new currency.
The crucial question is: How quickly will electronic commerce
revolutionize the role of money?