From Cash to Crypto: Critical Review of Digital Currencies' Growing Influence on Banks

Abstract

This paper investigates the impact of digital currencies on the traditional banking system in India. It explores the evolution of digital currencies, their impact on transaction methods and financial intermediaries, the regulatory challenges and responses, security and privacy concerns, and the economic implications. The paper finds that digital currencies have the potential to disrupt traditional banking practices, offering new opportunities for peer-to-peer payments and remittances. However, they also present challenges related to regulation, security, and privacy. The economic implications of digital currencies are multifaceted, with both potential benefits and risks. The present paper critically examines the extent to which digital currencies have penetrated the Indian market and their usage among different demographic groups and the potential benefits and challenges of digital currency adoption for Indian banks, including changes in revenue models, operational efficiency, and risk management. It also studies the regulatory landscape surrounding digital currencies in India and the role of the RBI in overseeing their development and use and the potential implications of digital currencies on the Indian financial system, including their impact on monetary policy, financial stability, and consumer protection.

The paper concludes that the future of digital currencies in India is uncertain, but they are likely to play a significant role in the financial landscape. To ensure that the benefits of digital currencies are realized while mitigating the risks, appropriate regulatory frameworks, technological advancements, and consumer protection measures are essential.By understanding these factors, this research will provide valuable insights into the future of banking in India and the potential role of digital currencies in shaping its evolution. Gnanaprakasam (2018).