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Lawrence H. Summers said that Bitcoin could maintain reducing costs and decrease inefficiencies in the global payments system and that the digital currency needs greater regulation.
A timely discussion about Bitcoin and the future of payments technology featuring a fireside chat with former US Treasury Secretary and President Emeritus of Harvard University Lawrence H. Summers conducted by Michael Casey, Senior Columnist for Global Finance at The Wall Street Journal, was held on February 11, 2015, Wednesday, at the Museum of American Finance on Wall Street.
According to a report by The New York Times, during the discussion, Lawrence H. Summers said that Bitcoin, the digital currency that has become a phenomenon in the technology and financial industries, could maintain reducing costs and decrease inefficiencies in the global payments system:
“We have seen so little innovation cumulatively directed at taking the frictional costs out of the system. The notion that there’s going to be a lot of innovation and experimentation around how those frictional costs can be taken out feels like a very important kind of idea.”
Mr. Summers pointed out that Bitcoin or any other payments technology needs greater regulation to achieve widespread acceptance:
“If the day ever comes where Bitcoin counts for an appreciable fraction of commerce that takes place in the world economy, on that day it will be because that commerce is regulated and subject to safeguards and people believe that something other than a mathematical algorithm is ensuring that their money will not be stolen.”
During the interview with The Wall Street Journal in April, 2014, Larry Summers compared critics of digital currency to those who denied such innovations as the Internet, plastic tennis rackets and digital photography during their early days:
“The people who rejected the Internet as a curiosity for scientists were on the wrong side of history, the people who rejected digital photography as really an artificial thing were on the wrong side of history, and the people who felt that non-gimmicky tennis racquets were made with wood were on the wrong side of history. So it seems to me that the people who confidently reject all the innovation here [in new payment and monetary systems] are on the wrong side of history.”
Besides, Mr. Summers admitted that the existing system requires “enormous investment” in alleviating credit-card fraud and that in an “increasingly uncertain world” there is a natural desire to have “secure global stores of value,” a role that some digital currency enthusiasts see being performed by these new instruments.
“I’m not ready to stand with those who are sure they have seen the future here, but it seems to me that it’s a serious mistake to write this off as either ill-conceived or illegitimate.”
Last February, during the interview with Politico, Larry Summers gave an optimistic view of Bitcoin:
“I think Bitcoin has the potential to be a very, very important development. I think that we are seeing many, many sectors of our economy be transformed by information technology and certainly it seems bizarre that at this late date, one has to pay as much as one does to use a debit card or to get cash from an ATM or to transfer money to one’s child living abroad. So it seems to me that there’s going to be a concerted effort to reduce financial frictions and that effort’s going to be multi-faceted and certainly Bitcoin is an innovative approach in that regard.”