Examining the Impact of Cryptocurrencies on the Traditional Banking System: A Review

Abstract

This study delves into the effects of cryptocurrencies on the conventional banking sector, with a specific focus on their impact on different facets like financial inclusivity, transaction effectiveness, regulatory hurdles, and financial robustness. Through an examination of current data and scholarly works, this paper presents an all-encompassing evaluation of how cryptocurrencies are restructuring the financial environment. The examination underscores the advantages and challenges that cryptocurrencies bring to the established banking entities. The studies suggest among others that; Traditional financial institutions should embrace technological innovation by incorporating blockchain technology into their operational processes, engage in collaborations with regulatory bodies to establish coherent and efficient regulatory frameworks for cryptocurrencies as well as actively engage in discussions and pilot programs revolving around Central Bank Digital Currencies (CBDCs). Collaborating with central banks to develop and implement CBDCs will ensure their seamless integration into the current financial landscape.