What is the Effect of Using Cryptocurrency on the Financial Sector in the Future?
Cryptocurrencies have given people a new way of financing, which could be a threat to banks. For this reason, many experts are suggesting that banks need to adapt to this new technology by learning how to use it and adapt it in their systems or else, they will be outdated. Cryptocurrencies are different than today’s financial systems because they can be translated into regular currencies and are used to make transactions that are not backed by any central bank, and thus do not depend on any banks’ decisions or authority.
The Bank’s Opinion Regarding Cryptocurrencies
Around the world, banks have different reactions when it comes to cryptocurrencies. While some national banks are completely against it, others seem to see the opportunities that this technology-backed method can provide them.
So far, Vietnam and China have banned cryptocurrencies. Vietnam considered virtual currencies as illegal forms of payments in their country, fining their use with huge sums of money.
On the other hand, the Head of Payments at the Reserve Bank of Australia, Tony Richards, says that digital currencies do not pose any pressing issues towards their bank’s payments policy mandate. He believes that rather than regulating crypto, it can bring more benefits to regulate the industry that aids it. Richards believes that many opportunities can be in the benefits of the banking sector if they adopt cryptocurrency and blockchain in their system.
The British banks stand somewhere in the middle, moving closer to the Asian bank’s decisions. They decided to avoid dealing with companies that adopt cryptocurrencies. They believe that if the central bank incorporates digital currency in their system of work, then there would be some implications on the financial stability and the monetary policy. The British banks believe that despite these complications, they are researching the feasibility of a central bank-issued currency.
Could Cryptocurrency be the Future of Banks?
While the answer to this question is not clear yet, if cryptocurrencies will remain unable to get inside the bank systems or the traditional financial practices, the longevity of the technology could be at risk. This means that a middle ground needs to be achieved, asking cryptocurrency creators to accept the importance of traditional banking practices, and the banks to try to understand better the opportunities that cryptocurrency can bring to their work.
In fact, more and more banks are considering the latter option. Even with all the arguments about the effects that cryptocurrencies could bring to the banking system, six banks are currently working together to create crypto of their own. The banks include Credit Suisse, HSBC, Canadian Imperial Bank of Commerce, MUFG and Barclays, State Street. There is a hope that these banks will be able to get along with the blockchain technology in a way that regulates cryptocurrencies for the sector and gets rid of all the concerns regarding criminal acts.
Cryptocurrencies Effect on the Banking Landscape
What is deemed to happen is change, however it is not clear towards which destination.
Source:
