OVERVIEW OF THE INTERMEDIARY ROLE OF BANKS: THE THREAT OF CRYPTOCURRENCY

Abstract

Banks play a major role in all the economic and financial activities in modern society. Almost all forms of trade and commerce would slow down rapidly if banks were not there to handle financial transactions. The economic development of a modern society depends on industrial growth. Banks promote these activities by mobilizing small deposits from the public and providing financial resources to big industries. Thus, the major role played by banks is that of financial intermediation. The prevalence of cryptocurrency poses a competitive threat to banks due to its anonymity and the blockchain technology that drives it which offers a complete self-contained substitute to the traditional payment system. Cryptocurrencies and its underlying technology are transforming the global financial system by making it less centralized eliminating borders which continually diminish the dependence on traditional banks whose main function as financial intermediaries stands the risk of extinction. This article examines the concept of cryptocurrencies and how it poses a threat to the existing financial intermediation process in Nigeria. Article visualizations: