Christian Nolting, the bank’s Global Chief Investment Officer and the Global Head of Wealth, and Markus Muller, Global Head of the CIO office, explained the functions of cryptocurrencies and blockchains along with predicting the future of banking with these tools.
It was further mentioned that blockchains and cryptocurrencies could be the most change-inducing inventions for the finance sector and the public since the “invention of the internet”. The bank stated that it sees the blockchain as “one of the most innovative developments in recent years”.
Regulations for Cryptocurrencies
While the bank sees blockchain as a highly influential method to conduct business in the future, the currently available cryptocurrencies leave a lot to be desired as per the institution. It is the bank’s view that the general criterion of acceptance is not fulfilled by cryptocurrencies, which causes the central banks and relevant authorities to not vouch for the quality of these currencies.
As per the bank’s analysis, every historical currency has needed the support of a central authority to guarantee its value and deliver securities to its investors. For cryptocurrencies, changes such as more regulation and believable securities are necessary, the bank suggested.
It was further mentioned that cryptocurrencies could evolve in a number of possible ways in the future. Some of the possible factors affecting their growth ranged from competition between different currencies and government intervention.
Despite these reservations, the bank perceives cryptocurrencies as a serious method to conduct business.
“Cryptocurrencies will raise further attention especially in crisis countries, where they could represent an alternative to inflation threatened currencies.”
Current Options Involving Cryptocurrencies
The bank reported recent instances of financial institutions looking into utilizing cryptocurrencies as a legal payment method. It was explained that the first certificates and funds based on cryptocurrencies have been launched in a few countries. It was also noted that CME Group plans to introduce Bitcoin Futures.
The bank also mentioned that after Japan allowed Bitcoins as a legal payment method, they also allowed eleven companies to trade Bitcoins. It was further explained that the government in Dubai officially announced their own cryptocurrency called “emCash,” which is used for government transactions but also for daily payments.
Considering a new virtual currency
Continuing from the move by the government in Dubai, the bank explained that “digital currency by central banks could change the business model of banks fundamentally.” It was mentioned that Deutsche Bank along with UBS, Santander, and BNY Mellon are designing their own virtual currency called “Utility Settlement Coin.” It is aimed to aid bankers, making stock brokering faster and cheaper.
CRYPTOCURRENCY IS HERE TO STAY
Seeing how major financial institutions are now looking into virtual currencies and blockchain as serious avenues, it is only a matter of time before banking is revolutionized by these factors. Taking a cue from the bank’s comparison, it would be interesting to watch how this considerably new form of payment redefines the world, much like how the internet did decades ago.
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