Nobel Laureate Paul Krugman Praises Brazil’s Pix, Criticizes US Approach to Digital Payments
Nobel Prize-winning economist Paul Krugman has lauded Brazil’s Pix payment system while simultaneously criticizing cryptocurrencies. In a recent commentary, Krugman argued that Pix has successfully delivered on the promises that cryptocurrencies failed to achieve.
Krugman, known for his sharp critiques of the crypto industry, previously predicted the demise of Bitcoin in 2022. Despite the cryptocurrency’s subsequent 600% surge in value, he remains skeptical.
Krugman Highlights Pix’s Success, Slams US for Embracing Stablecoins
Krugman contrasts Brazil’s innovative, central bank-led approach with the United States’ reliance on the private sector, particularly stablecoins. He believes the US is making a mistake, pointing to Pix as a superior model.
“I can’t help but notice that Pix is actually achieving what crypto enthusiasts falsely claimed was possible through the blockchain — low transaction costs and financial inclusion,” Krugman stated.
He emphasizes the widespread adoption of Pix in Brazil, with 93% of the population using it, compared to only 2% of Americans using cryptocurrencies for payments in 2024.
Krugman also addressed a darker side of the crypto world:
“Oh, and using Pix doesn’t create an incentive to kidnap people and torture them until they hand over their crypto keys,” he added, referencing the increasing incidents of investor kidnappings.
He further notes that Pix transactions are settled in 3 seconds at no cost to the payer, offering significant time and cost savings compared to credit and debit cards.
Economist Criticizes US Government for Blocking CBDC Development
While Pix is not a Central Bank Digital Currency (CBDC), Krugman criticized the US government for hindering the creation, and even the study, of a CBDC. This was exemplified by the Genius Act, signed into law recently.
“What Republicans really fear, with good reason, is the possibility that many people would prefer a CBDC to private bank accounts and stablecoins. And, in general, any attempt to create a full CBDC would face strong opposition from the financial industry,” Krugman wrote.
He proposes a partial CBDC solution, maintaining private bank accounts while providing an efficient, public payment system. He argues that Brazil has already demonstrated the feasibility of this approach.
Krugman acknowledges the existence of Zelle, a US banking consortium-operated system, but asserts that “Pix is much easier to use.”
The US Federal Reserve launched FedNow, a system similar to Pix, in July 2023. While FedNow is gaining traction, it remains far from Pix’s widespread popularity.
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