Citi Group Executive Calls For ‘State-Backed Cryptocurrencies’

A senior executive from banking giant Citi Group has called for state-backed cryptocurrencies to encourage wider adoption of the technology.

Morgan McKenney, who has recently ascended to the role of head of core cash management in the company’s Asian-Pacific business, suggested that the group’s new CitiConnect blockchain project was part of a broader movement, which would ultimately require state backing and fiat currencies switching to blockchain models.

McKenney opined that the optimal environment for CitiConnect and other blockchain technologies to thrive was one in which governments worldwide embraced the technology within their own currencies, and would support the adoption of cryptocurrencies as a central payment method to the blockchain revolution.

According to McKenney, more closely linking cryptocurrency with fiat currency would encourage its more widespread adoption, which would be a positive outcome for the wider financial system and the development of blockchain applications.

“If you had a digital dollar, if you had a digital pound, exactly fungible with the note in your wallet and the dollar in your bank account, then you’d be willing to use that digital currency much more throughout your ongoing daily transactions.”

While cryptocurrencies to date have only been issued privately or via decentralized protocols like bitcoin and ethereum, McKeeney suggested that a central bank fiat issuance would significantly boost liquidity in the cryptocurrency markets, as well as creating additional complementary markets for the currencies.

“If you believe that more assets will eventually be captured and contained in blockchain systems, and therefore you would want to exchange them, sell them, buy them, you need a mechanism of payment that works in that ecosystem.”

Citi maintains an index of countries ready to embrace digital currencies, based on their own internal research. At present, the index stands at a total of 90 countries that could embrace digital currency more fully, including issuing fiat through digital means. These include the United States, the United Kingdom, Canada, much of continental Europe, China and Australia.

While for some, the prospect of centrally issued digital currencies seems a long way off, Citi Group’s statements are a further indication of support across the financial sectors for a more full-throated embrace of the technology, in line with current established financial systems.