ING Bank spell out use cases for digital currencies


ING kick off the report explaining how the governments and Central Banks around the world are worried about the implications of Libra on traditional banking.

They also talk about the potential advantages to the stablecoin technology in regards to efficiency and cost. 

 Their immediate concerns relate to the disintermediation of the traditional banking system and the potential loss of monetary sovereignty

One of the main points of the reports comes from the fact that remittances could be an immediate use case for digital currencies.

The bank point out: The global remittances market reached USD 689 billion in 2018 and will grow beyond USD 700 billion by the end of this year, according to World Bank estimates. They then point out the global average cost of sending remittances currently stands around 6.84%, which is relatively high.

ING then focus on one country, in particular, saying that Ukrainian workers will send some USD 16 billion (11.8% of Ukraine’s GDP) back to their home country this year.

Moreover, the total average cost for sending USD 200 of remittances from the US to Ukraine stands at around USD 9.90 (or 4.95%). This includes both the transaction fee and the exchange rate margin cost.

The launch of either a private or a publicly-issued digital currency (e.g. the National Bank of Ukraine conducted an e-hryvnia pilot this year already) could compress both costs, which would offer Ukrainians another (digital) channel to send their remittances back to their home country. And if digital currencies are accepted by retailers at point-of-sale and on e-commerce platforms, this could in theory diminish dollar demand

This is a massive call from the Dutch bank. This is the main area of backlash amongst central banks and governments in my opinion. A world without a direct dollar reserve currency would have huge implications on traditional banking and finance. Maybe the US will create a Central Bank Digital Currency first, only time will tell.



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