What was the ANZ warning?
ANZ’s New Zealand chairman John Key recently said that both retail and central banks need to take the opportunities presented by cryptocurrencies or risk being left behind.
At an event hosted by the think tank NZ Initiative he said he believes that cryptocurrencies can make the overall payments system more efficient:
I can’t tell you where Amazon and Facebook and these guys are going to end up, but what I can tell you is they could easily become part of a very globally integrated system – not only just for purchasing goods and services, but within the payments for that.
There’s a lot of money there and a huge amount of volume and I just think over time that space is going to change dramatically and banks are going to have to adapt. If they don’t adapt, their income streams are going to fall.
An unstoppable trend?
Mr Key thinks that the economic shift to cyber finance and digital currency is going to keep going, with or without the big current players.
This could have important ramifications for all of Australia’s large, listed financial institutions, not just ANZ, including Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB), Macquarie Group Ltd (ASX: MQG), Bank of Queensland Limited (ASX: BOQ), Bendigo and Adelaide Bank Ltd (ASX: BEN) and Suncorp Group Ltd (ASX: SUN).
Andrew Cornell, the managing editor of ANZ’s bluenotes – a digital newsroom and blog – noted:
There’s no doubt the rules of battle will be determined by regulation and national jurisdictions but that will be to restrain illegal activity, money laundering and tax avoidance while maintaining power for national governments.
Within those constraints, regulators, supervisors and the market recognise the opportunity new technologies are bringing for new products and services and greater efficiency with existing ones.
Mr Cornell also points out that central banks, regulators and other stakeholders are now taking a greater interest in cryptocurrency and digital currency.
Reportedly, the global banking regulator, the Bank of International Settlements (BIS) has said that issuing central bank digital currencies (CBDCs) could improve the payment system, though there are still things to consider regarding the macroeconomic implications and the co-ordination of cross-border payments.
Australia’s Reserve Bank of Australia (RBA) said in its most recent annual report that it “has updated it strategic priorities for payments policy and will focus on the shift to digital payments, research CBDCs and other innovations, and understand the impact of new tech and players while identifying and resolving any competition and efficiency issues associated with new technologies and new players in the payments system.”
Impact on ANZ?
ANZ is one of the biggest financial institutions in Australia (and New Zealand). It will be interesting to see what part it plays in the shift to digital currency.
In ANZ’s FY21 result, it generated $6.2 billion of continuing operations cash profit after tax.
Net interest profit makes up a large portion of the business. But there is also the potential for the bank to gain exposure, or lose out, to cryptocurrency and digital currency.