Digital currency advocates envision a future in which people everywhere have access to cryptocurrency that is neither controlled nor directly influenced by any centralized authority. Many of them dream of a world where fiat currencies are replaced by a global cryptocurrency. In a recent conversation with CNBC Make It, however, Payoneer CEO Scott Galit suggested that the idea is unrealistic:
"Despite the interests of lots of people out there in the Internet world who love the idea of frictionless commerce and frictionless money and avoiding fiat currencies, I don't see it.”
To support his skepticism, Galit cited a number of challenges that a non-fiat global currency would pose for existing central authorities. For example, he noted that any move to a single, non-fiat, global currency would offer no real benefit to the U.S. government, which would be unlikely to accept tax payments made in Bitcoin or other cryptocurrencies because that would leave government revenues vulnerable to fluctuations in digital currency exchange rates.
Galit also suggested that the Federal Reserve would oppose the idea, since fiat currency is critical to the Fed’s ability to influence the financial system and monitor and contain risks:
"Central bankers are there to actually help manage the economies and provide kind of stewardship for those economies. Part of that is actually managing currency in the interest rates [for lending] and in exchange rates. If you don't actually have any control over a currency you've lost one of the major policy tools that you have, so what do you do?"
As CNBC noted in its story, Galit’s company processes fiat currency payments from around the globe – which means that he has a financial interest in maintaining the status quo.