The introduction of digital currencies can seriously affect the current banking system, up to and including its destruction. This was reported by CNBC, citing Wall Street banking analysts on Tuesday, April 20.
It is noted that US banks “have several more years” before the introduction of the digital dollar.
The Federal Reserve System (FRS), which acts as a regulator, has launched a digital dollar project with the Massachusetts Institute of Technology, but has not yet implemented the new product. On April 12, Fed Chairman Jerome Powell said he was exploring the possibility of launching a digital dollar, but there was still no concrete solution.
It is emphasized that the central banks of most countries, for example, China and the Bahamas, are increasingly interested in digital money as a tool for non-cash payments in the future. Thus, “up to 86% of the world’s central banks” study digital currencies.
Experts believe that with the arrival of digital money, traditional banks may lose customer deposits. In addition, they indicate a privacy issue in their use.
Analysts fear that with the launch of the digital yuan in 2020, the Chinese currency “could eventually undermine the dollar’s status as the world’s reserve currency.”
According to a survey conducted by the Bank for International Settlements (BIS) in 2020, about 60% are working on testing a “proof of concept” for digital money, but only 14% have actually launched a pilot program or are in the process of developing this type of currency.
Associate Professor of the PRUE G.V. Plekhanov Denis Domashchenko told Izvestia that this is not about the destruction of the banking system due to the introduction of digital money, but about its transformation.
“I would not talk about the destruction of the financial or banking system. Both the one and the other are simply gradually transformed. And new forms of money will compete with more traditional ones, ”he said.
The expert stressed that “no one is going to cancel cash” and they are “still popular” among the older generation.
At the same time, according to him, with the advent of digital currencies, “profit centers” for banks will shift, ecosystems and financial supermarkets will become more in demand.
Speaking about the possibility of traditional banks losing their clients’ deposits, the specialist noted that current accounts with the Central Bank are without interest income, and deposits can only be withdrawn from banks if the regulator undertakes “the entire range of financial services in full”. He recalled that this option was considered when discussing the concepts of the digital ruble, but in the end it was abandoned.
The Bank of Russia is going to test the digital ruble in 2022. The first deputy chairman of the Central Bank Olga Skorobogatova said that after these actions, a roadmap for the further implementation of the project would be determined.