Digital currency: Threat or opportunity?

The global financial landscape is undergoing a profound transformation with the advent of digital currencies, particularly cryptocurrencies and Central Bank Digital Currencies (CBDCs). While cryptocurrencies like Bitcoin offers scope for decentralisation and financial autonomy, they also present regulatory challenges and volatility concerns. In contrast, CBDCs-government-backed digital currencies-offer stability but raise privacy concerns and questions about state control over financial transactions.

For Bangladesh, digital currencies present both opportunities and threats. On the one hand, they could revolutionise cross-border remittances, reduce transaction costs, and enhance financial inclusion by providing access to banking services for unbanked populations. With a large diaspora sending remittances, digital currencies could offer a more efficient and cost-effective method of transferring money. On the other hand, they could facilitate illicit financial activities such as money laundering and terrorist financing, and undermine monetary policy by making it harder to control inflation or currency supply. The government's cautious approach reflects these concerns, as the absence of clear regulations leaves digital currencies in a gray area.

Additionally, the rise of digital currencies could challenge the traditional banking sector, pushing institutions to innovate and adapt or risk becoming obsolete. However, the potential for cyber threats and fraud also looms large, as the largely unregulated nature of the digital currency market exposes investors and users to higher risks.

Should Bangladesh embrace digital currencies or adopt stricter regulations? A balanced approach-encouraging innovation while ensuring regulatory safeguards-could be the guiding principle for navigating this uncharted course.

Saikee Md. Zahid Chowdhury

Student

Department of Management

School of Business and Economics

North South University

saikee.chowdhury@northsouth.edu