Big Banks Can no Longer Ignore the World of Cryptocurrency
The massive growth of cryptocurrency and initial coin offerings is showing the largest central banks around the world that they can no longer ignore it. Cryptocurrency could pose a risk to the financial system as a whole as it is revolutionizing economics around the world.
Many are wondering whether or not central banks will begin to issue out digital currencies of their own and what they should have in common. The decision to do so is most prevalent in a country like Sweden where the use of cash is dropping to an all time low.
The attributes associated with cryptocurrency is what makes them so enticing. Privacy and efficiency in payment systems are two of the most enticing factors. BIS stated in a quarterly review that “Institutions need to take into account of not only privacy issues and efficiency gains in payment systems, but also economic, financial and monetary policy repercussions.”
This analysis came out at a rough time given that the chief executive of JPMorgan called bitcoin a “fraud”. This in addition to China’s recent crackdown on ICO’s and the shutdown of its bitcoin exchanges, has helped to lower the price of the coin dramatically.
As bitcoin increases in popularity as a way to completely digitize payment systems, investors will continue to pour in loads of money. Central banks such as the Bank of England have begun to dive into the world of cryptocurrency which could revolutionize the traditional world of finance.
The Dutch Central bank has decided to make its own cryptocurrency, but it is solely for research and has maintained as an internal currency only.
Federal Reserve Governor Jerome Powell stated that there are “significant policy issues,” that need further study regarding the currency form.
As time goes on, banks are becoming more comfortable with the idea of using cryptocurrencies altogether which could benefit the public in a myriad of ways.