Digital currencies payments and market infrastructures

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by Wirba Brice Divine Ransinyuy

Many banks often function in a typical manner of retailing payments as a part of their role in maintaining the stability and effectiveness of financial systems and keeping the confidence in the used currencies. With the emergence of the new form of currencies, commonly known as digital currencies, it is being examined by different committees and organizations and as such, it has had an immediate and direct impact on payments and market infrastructures. A wide range of factors have relatively contributed to the development and use of digital currencies and distributed ledgers as in many continents as well as various countries with some countries seeing digital currencies as a way to rise back their fallen currencies and economy. This is especially the case with Latin American countries.

Just like retrial payment systems or better still payment instruments, network effects are very significant and relevant for digital currencies.  One potential source of significance and relevance is for example, digital currencies do have a universal reach by design and moreover, distributed ledgers do offer lower costs to end users when comparing them with existing centralized arrangements looking at some forms of transactions.

Digital currencies are an enormous innovation that is already having a range of impact on financial markets. These impacts do have the potential of disrupting various business models as well as existing systems as it will facilitate new economic linkages and interactions. This is particularly the case with the implication of digital currencies in various retail payment schemes like for example e-commerce, person-to-person payments and cross-border transactions making them faster than the usual speed.

Despite these astonishing attributions, if digital currencies become widely accepted by all, they will have a considerable impact on central banks, such as payment system oversight and regulation, monetary policies, financial stability may become more prominent and existential. Apart from the fact that digital currencies are being viewed basically in financial terms, they are also in most cases seen as assets. They are viewed as assets due to their value which is being determined by supply and demand which is being compared in concept to commodities like gold.

Digital currencies are also known for sharing key features which are several schemes they share together, this distinguishes them from the traditional e-money schemes, better known as electronic money. Digital currencies are a more and better developed form of e-money as they could be adapted to particular situations.

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