A digital currency is any type of payment which is in electronic form and is accounted for and transferred using computers. Examples of digital currencies are cryptocurrency, virtual currency, and central bank digital currency. Well known cyptocurrencies are Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), Dogecoin (DOGE), Polkadot (DOT), Stellar (XLM), Carnado (ADA), and Bitcoin Cash (BCH). I am researching cryptocurrencies and would like to know why Banks forcefully oppose the use of digital currencies. Any sugestions would be very much appreciated.
Perhaps the examples are very risky digital assets, and do not have the status of a currency like the dollar, euro, peso, double, yuan, etc. Have a look at some pilots of CBDCs in the world
sometimes it's due to reputation reasons. Banks don't want to be seen promoting currencies that regulators do not approve of.
Many banks are actually trading in private digital currencies. They do these trades privately using SPVs so that the transactions wont be recorded on their balance sheet.
Dear Dr Ako Doffou . See the following useful RG link: Article The promises and perils of central bank digital currenciesPr...
Kindly see also the following very good link: https://publications.iadb.org/publications/english/document/Digital-Central-Bank-Money-and-the-Unbundling-of-the-Banking-Function.pdf
Hi, you can consider the following publications for your research on Cryptocurrencies:
Article Tail dependence between bitcoin and green financial assets
Article Examining the Interrelatedness of NFT’s, DeFi Tokens and Cry...
Chapter Applications of Blockchain Technology in the Finance and Ban...
Further, you can also explore this project:
https://www.researchgate.net/project/COVID-19-and-financial-markets
Security, loss of monopoly privileges which Banks have over other institutions. Banks are deposit taking institutions. Will use of digital currency erodes that advantage and definition of being a bank.
Muhammad Abubakr Naeem I think your valuable answer would throw light on the topic in a meaningful way.
I agree with @Chung Tin Fah's view on why Banks vigorously oppose the use of digital currency. Banks might lose control over clientel management.
Thank you all (Sitara Karim, Chung Tin Fah, Proloy Barua, and Faten Dhanoon) for your answers.
According to Adrian and Mancini-Griffoli (2019)
https://www.imf.org/en/Publications/fintech-notes/Issues/2019/07/12/The-Rise-of-Digital-Money-47097
there are five main forms of digital money:
CBDCs,
cryptocurrencies,
b-money issued by banks,
electronic money (e-money) offered by new private sector providers and
investment money (i-money) issued by private investment funds.
In general, crypto-assets are characterized by:
- lack of consumer protection.
- challenges to anti-money laundering and terrorist financing controls.
- security problems; and.
- volatility and uncertainty.
They are defined as “a bet, a speculative high-risk contract with no supporting fundamentals”. They do not have “socially or economically useful functions” (Panetta, 2021a and 2021b).
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