Mohamed El-Erian sees a world one day that eschews paper money in favor of digital payments that could include government-issued cryptocurrency.

"Is there a role for cryptocurrency in the future? Yes, but critically, officially sanctioned, that's very different," the chief economic advisor at Allianz told CNBC on Tuesday.

"Officially sanctioned" could take the form of a government-issued digital coin, like bitcoin for example, but that's going to take "many years," El-Erian said. "It's not something that we're going to see in the next three to five years … because people's habits and people trusting in the new medium and change doesn't happen overnight."

But make no mistake, "we are moving away from cash," said El-Erian, former CEO of Allianz-owned Pimco. "Go to Sweden and you'll see how fast one can move away from cash."