The largest competition to mainstream banking comes out of the fintech space. Increasing the attention of digital currency at Davos was a recent International Monetary Fund white paper on digital currencies. The IMF demonstrates such markets are still very small in scale (a paltry $7 billion in market value compared to the $1.4 trillion value of US paper currency in circulation). The global body did confirm they are growing so fast policymakers and bankers need to start educating themselves on the innovations in payments. Major banks have entered into the digital currency space by designing their own fintech solutions. Still, there are diverse opinions on nascent payment technology.
“We know that bitcoin itself is a complete failure and shows the number one law of programming and software: that anything that can be programmed can be hacked. So nothing is completely secure,” said Willem Buiter, Citi’s chief economist.
The cyber boys . . . they believe that this is something that can just work on its own and allow a seamless web of costless transactions across the world. Forget it.
Executives from Morgan Stanley, Deutsche Bank and the International Monetary Fund saidthat Bitcoin was still a nascent technology and still posed risks for consumers, and technological hiccups preventing its mainstream adoptions.
“It’s not going to change everyone’s life tomorrow,” said James Gorman, the chairman and CEO of Morgan Stanley.
“I wouldn’t be so worried,” said John Cryan, co-chief executive of Deutsche Bank. “Blockchain technology is interesting. Bitcoin, I don’t think is.”
Since the theme of this year’s Davos is technological innovations, it makes sense fintech and Bitcoin were at the center of discussions.
“If you’re going to be in the finance business, the finance regulation should be the same for everyone,” says Cathy Bessant, chief technology officer at Bank of America. Ms Bessant believes bank need to make their move to the cutting of the banking sector, including new fintech innovations. A top MasterCard executive told Business Insider at the World Economic Forum that the company was “very, very interested” in the technology.
“Like the rest of the world, we’re interested in seeing where blockchain technology goes, and that’s why we invested in DCG,” Garry Lyons, MasterCard’s chief innovation officer, toldBusiness Insider.
“It’s connected to 15 different others and they have their fingers in the right pies, so we’ve got the right engagement right now to see people experimenting with the underlying tech,” Lyons said.
It’s not just the industry that’s excited about blockchain — it’s the world, everyone. Even at Davos, every single tech panel I have gone to mentions blockchain, and some people call it the second coming. But while we think it’s very interesting, we don’t want to, and no one wants to, be blindsided by rushing into it.
Source: Economic Policy Journal