Banks and financial institutions might need to embrace instant payments and bank transfers in order to be able to compete with Bitcoin and other cryptocurrencies.
Competing with Cryptocurrencies
One of the main reasons why cryptocurrencies have gained such popularity is their ability to instantly send payments worldwide cheaply and quickly – usually within a couple minutes. Banking transfers currently require 2-3 days to process and often times are more expensive than Bitcoin transfers. Many experts believe that this might push more people to use cryptocurrencies like Bitcoin and Ethereum instead of traditional bank transfers.
In an article by Reuters Yves Mersch, a member of the European Central Bank’s executive board (ECB) advised banks to embrace instant payments in order to offer consumers a competitive alternative to cryptocurrencies. Mersch stated:
Banks need to implement instant payments as soon as possible and provide an alternative narrative to the ongoing public debate on the alleged innovation brought by virtual currency schemes.
He also said:
We shall also experiment with cash on different digital technologies. Other adventurous applications of a more disruptive nature are simply not robust enough.
Many analysts believe that banks should further experiment with new technologies and perhaps even with fiat-based cryptocurrencies in order to be innovative in the current market.
Not the right time to buy Bitcoin?
As Bitcoin is currently trying to stabilize at the $10,000 mark, some finance experts believe that we might witness a short-term correction. According to a recent article by CNBC, the vice president of the ECB, Vitor Constancio, stated that buying Bitcoin at such a high price is very risky. He stated:
It’s a very particular asset, it’s a speculative asset by definition looking to the developments in its price. Investors are taking that risk of buying at such high prices,
he also added:
Certainly I don’t think it would spread to other markets
Most financial institutions are still not completely convinced from digital currencies, but there is no doubt that they are monitoring the current situation. It definitely might take some time before central banks will embrace decentralized cryptocurrencies and try to experiment with them.
What are your thoughts on the ECB’s stance on cryptocurrencies? Do you think that Banks should further innovate in order to stay competitive against cryptocurrencies like Bitcoin? Let us know in the comments below!
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