Say cryptocurrencies take off and people hold more of their savings in crypto instead of bank deposits. Currently everyone's savings is in bank accounts which is being lent out to businesses and hence stimulating the economy. What is going to happen if bank deposits drastically decrease?
On the one hand, maybe it will not have much effect on the economy because since lending will become tighter, businesses will need to justify the loans more (vs. if there is easy access to money) and will create stronger proposals. On the other hand, could it have a detrimental effect on the economy?
First, i believe bitcoin users or crypto users are helping increase bank deposits. Crypto users will not entrust their big money in banks for fear of being questioned. If they have millions in hand i doubt they will put it in banks or banks will freeze their accounts and investigate the source of the said money and charge tax on it. I know some friends do not put their money in banks. In economy, i dont think it helps much but to some jobless individuals maybe.