The potential impact of development of global digital currencies
Money serves three interrelated economic functions: it is a medium of exchange, a unit of account, and a store of value. There are many differences of opinion whether digital currencies would be able to stand up to these functions over time. The pro's are rapid global access and usage at high speed at low cost, however, it is threatened by volatility, scaleability, lack of ATM infrastructure and the 'dark' usage of money off the grid. My view is that it doesn't pose a current threat to normal retail banking, but it must be a big concern and revenue loss for the international banking payment system, SWIFT.
It does not look like digital currencies can be a threat to traditional banking system currently but if it were to cross the enormous hurdles it faces in terms of costs in manpower, system implementations, and government regulations it could manage to hit international banking systems and macroeconomic factors, many of which depends on comparison of economies through a common currency like the USD or Euro.
I am not sure, if such currencies will be accepted by the middel east banking and financial institutions any time soon..
12 months ago