IMPACT OF DIGITAL CURRENCIES ON TRADITIONAL BANKING SYSTEMS AND FINANCIAL STABILITY

Abstract

The study investigates the profound implications of digital currencies on traditional banking systems and financial stability. Through a comprehensive analysis of the evolving landscape, it examines how the rise of digital currencies, such as Bitcoin and stable coins, challenges the conventional banking model, alters payment systems, and potentially reshapes the regulatory framework. The research delves into the potential risks and benefits associated with the integration of digital currencies into the financial ecosystem, considering factors such as monetary policy transmission, financial inclusion, and systemic stability. By providing insights into the transformative impact of digital currencies, the study aims to inform policymakers, regulators, and market participants about the necessary adaptations required to ensure the resilience and effectiveness of banking systems amidst this paradigm shift in finance. Keywords: Digital Currency, Inclusion, finance