Redefining banking: exchange traded savings and loans using cryptocurrencies
by Nipun Agarwal
International Journal of Electronic Banking (IJEBANK), Vol. 3, No. 1, 2021

Abstract: Existing financial institutions have been setup as brick and mortar companies with branches across the world. However, with the introduction of the blockchain technology, it is much easier to disintermediate the basic building blocks of banking. Most banks depend on savings accounts to support their lending activities and through financial intermediation make significant profits. This paper shows how political economy and blockchain technology can allow this banking function to be changed into a market tradable product; in effect, removing the restrictions that exist across banks. Further, interest rates across the global economy should reduce, as this market-based mechanism should reduce interest rates through better competition and it should completely remove the require for the central bank to act as a lender of last resort and as a result removing the idea of moral hazard.

Online publication date: Wed, 01-Sep-2021

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