The world is at a major tipping point and our financial order is about to change. If the Nixon Shocks of 1970’s changed the world’s gold standard mone
The world is at a major tipping point and our financial order is about to change. If the Nixon Shocks of 1970’s changed the world’s gold standard monetary policy, the rise of cryptocurrency is challenging the traditional status quo of fiat currencies. We may be at a watershed moment of the 21st century where non-regulated currencies are starting to dominate the financial space.
In this background, a recent speech at a G20 conference by the president of Germany’s Central Bank, Dr. Jens Weidmann, puts some light on the recent changes brewing in the financial technology sector. Dr. Weidmann believes that adapting to blockchain technology can cut transactions costs and also make transactions faster and safer. The blockchain is reportedly a faster and a more direct way of transferring cryptocurrencies that automate a lot of human work. Though he admitted that some loss in revenue will occur for traditional banks, but he asserted that the “positive impact on overall welfare,” overshadows such temporary loss.
Germany is often a harbinger of financial and technological revolutions in Europe and the introduction of blockchain technology in its financial structure will surely be a gigantic leap forward. The head of the central bank also said that under his presidency, the Deutsche Bundesbank is collaborating with the country’s national securities exchange, the Deutsche Börse to develop a blockchain prototype that enables faster and safer trading. If correctly applied, this will enable greater efficiency and transparency in automated trading and high-frequency exchanges, making them not only faster but also cheaper.
The blockchain is notably a system of funds transfer via cryptocurrency that has the ability to bypass the conventional banking infrastructure. This is a concern for many central banks around the world for its anonymity but is also seen as a ray of hope for the next generation of financial technology. This can also pave the way for regulation and legalization of cryptocurrencies, which is now widely accepted and has recently touched record lifetime highs.