Australian consumers could live without a bank account within a decade as digital currencies replace banknotes.
The head of Australia’s corporate regulator predicts the Reserve Bank of Australia will be issuing its own digital currencies, which could make existing commercial banks obsolete.
Bitcoin, a digital cyptocurrency, has already revolutionised global financial transactions since it debuted in 2009.
Digital currencies, like Bitcoin, ‘could replace everyday bank accounts within a decade’
Australian Securities and Investments Commission chairman Greg Medcraft predicts central banks will issue their own digital currencies direct to consumers
Greg Medcraft, the chairman of the Australian Securities and Investments Commission, predicts central banks around the world will be issuing their own digital currencies within the next five to 10 years.
This would force existing commercial banks to change the way they do business.
‘The smart banks get it and are reshaping what they do, but they know they are probably living on borrowed time,’ he told the Australian Financial Review.
‘With central-bank issued digital currencies, you might not need a bank account anymore.’
Bitcoin was established as a digital currency eight years ago so buyers and sellers could trade with each other without needing a bank account.
The involvement of central banks in issuing digital currency could see consumers make direct deposits with the Reserve Bank of Australia instead of a commercial bank.
Digital currencies could replace everyday banknotes if commercial bank accounts become obsolete
Commercial banks may struggle to keep customers with high fees if central banks issued digital currencies directly
Commercial banks would also lose the opportunity to slug customers high transaction fees.
Consumers could also have the option of depositing their money with a technology company.
Mr Medcraft said Australia’s existing banks would have to change their business model to survive.
‘It means you no longer need to have a bank account to transact,’ he said.
‘There will come a time when if you want to transact, you won’t need a private bank account because you will essentially have a digital wallet with the central bank.
‘It means it breaks down banks’ role in the economy.’