Banks Are Seeking Innovation Amid Bitcoin’s Rise

In General, World

Digital currencies hold key to financial sector’s future.

Bitcoin and its virtual brethren may be harbingers of the future.

TOKYO — Banks and other traditional financial institutions are grappling with the rise of virtual currencies that challenge core assumptions about the sector and could bring about a seismic shift in how business is done.

Near the Acropolis of Athens, Vassilis Papadopulos, a merchant punched buttons on an ATM with a large “B” on its screen. Instead of accessing money from bank accounts, this machine lets users buy and sell bitcoins for cash. After living through multiple financial crises, he has concluded that neither the Greek government nor the European Central Bank can be trusted. “Bitcoin is crucial to protecting my assets,” he said. About 20% of his financial assets are now in bitcoins.

Such stories are not limited to economically troubled Greece. One Japanese man is convinced that this is the future of currency.

Yuzo Kano, CEO of bitcoin exchange operator bitFlyer, said he experienced a shock similar to if the Nikkei Stock Average hit the 90,000 mark when bitcoin surged three years ago in response to a comment by the head of the U.S. Federal Reserve. Kano quit his job at Goldman Sachs Japan, founding bitFlyer two months later.

“Virtual currency will be much easier to use in 100 years and will even be used as legal tender in certain countries,” Kano said. He sees a future where all that is taken for granted about currency and finance today is turned on its head.

Mitsubishi UFJ Financial Group could launch its MUFG Coin virtual currency by the March fiscal year-end. But a sense of crisis looms at the company even as it prepares for a possible new catalyst of growth.

“Why don’t we run our branches jointly with other megabanks?” a midlevel employee suggested at a mid-2016 meeting on structural reform. With the rise of online banking, physical branches and massive staffs have become a liability.

“We will cut 3,500 career-track positions in the next 10 years,” MUFG President and CEO Nobuyuki Hirano has said. But more drastic changes could be afoot. Bank of America Merrill Lynch estimates that 25 million workers in the financial sector will be displaced, ushering in an era of mass unemployment. Even central banks face risks, since virtual currency challenges their presumed monopoly on currency issuance.

“As the number of digital currencies rises, monetary policy will have less of an impact,” said Naoyuki Iwashita, head of the Bank of Japan’s FinTech Center. The Swedish and Chinese central banks are considering issuing their own digital currencies. Some at the BOJ want to as well.

Back in Greece, the merchant wants to eventually have 80-90% of his assets in bitcoins. Funds are flowing out of countries relying on extreme monetary easing and generous fiscal stimulus, and the value of a bitcoin topped $1,000 early this year.

Famed economist Friedrich Hayek wrote in “Denationalization of Money” that it would be healthy to have many competing currencies. This is now becoming a reality. The true battle for the future of banks and other financial institutions is about to begin.


You may also read!

Personal information

US Senator Demands Internet with ‘Do Not Track List’ For Personal Information

Do you think that personal data should be shared with websites? US Senator Josh Hawley thinks otherwise. As a

Online Security

Survey Shows Internet Users Have Terrible Online Security

How secure is your online privacy? Internet users might have no conception that their personal information entered online are

Louis Vuitton

Louis Vuitton Leverages on Blockchain to Verify Fake Products

Is there anything else that blockchain cannot do? Louis Vuitton along with ConsenSys and Microsoft have teamed up to


Leave a reply:

Your email address will not be published.

Mobile Sliding Menu