Virtual Currency Impact on the Financial Ecosystem

Virtual currency impact on the financial ecosystem

Essay, Martinas Stukas

With the development of digital technologies offers new payment methods and tools. One of these is a virtual currency, which resulted in finding alternatives to central banks in the circulation of money permitted. Lately there is a lot of debate on virtual currency security, reliability, and their role in the settlement. Appears and warnings from central banks and other institutions to critically assess the means of payment, the release is not supervised or regulated by central banks or governments. As well as publicizing the potential risks associated with virtual currency and settlements it. However, in spite of everything, a popular tool for billing, and the goods and services for which you can pay virtual currency rise. This fact leads to consider how it will affect the financial system and its participants. It did what popularity of virtual currency impact on the financial ecosystem?

Most popularity of virtual currency to contribute cheaper and faster transactions. Since there are no agents and no security requirements for the virtual currency settlement is carried out at a lower cost than the traditional means of payments, such as bank transfers or credit cards. The European Banking Authority (EBA in 2014), says that the average settlement bitkoinu, which is currently one of the most popular virtual currency, costing an average of only about 1 percent. the transaction amount and it is much less than traditional online payment systems of 2-4 percent. of the transaction amount. The growth of virtual currency payment and increase competition in the payment services market. The competition for payment services and transaction costs, existing differences can stimulate and traditional payment instruments providing banks or other institutions to reduce transaction costs. Furthermore, the virtual currency is a serious competition to a shorter and transaction processing time. According to the European Banking Authority (EBA in 2014), the entire billing process bitkoinais takes 10 to 60 minutes, so seriously compete with credit transfers and card payments, especially if payments are made between countries of reporting in different currencies. The emergence of a new tender requirements, the bank will be forced to offer competitive solutions already existing settlements or build new vehicles. Banks will make banks provide settlement services more convenient, faster and cheaper compared with virtual currency.

Virtual currency, in contrast to the traditional payment system that is not regulated. This fact leads to the virtual currency can be used to "criminals, fraudsters and money launderers who use virtual currency to perform illegal activities' (ECB, 2012). In the absence of any virtual currency and consumer protection, they are vulnerable to theft and break-ins in cyberspace, it is the same assumes all risks. In addition, incidents related to the virtual currency failures could have a negative impact on the reputation of central banks (ECB, 2012). Because the public may blame central banks for the losses and the inability to prevent it, in fact, central banks and other institutions reporting currency and virtual currency so far does not monitor makers. This may increase the distrust of the entire financial system. It would appear the need to develop adequate regulation and supervision of the creators of virtual currency, virtual currency to limit the possibility of the use of illegal actions, to ensure consumer protection. Therefore, central banks, governments and other regulatory bodies, growing interest in virtual currencies, looking for opportunities and ways to regulate payments in these currencies.

There is much talk about the possibility