Banking Through the Ages: Legacy Institutions in the Age of Ledgerless Finance

This paper uncovers the historical evolution of banking systems particularly in response to modern innovations in technology. A specific emphasis is placed on the innovation of cryptocurrencies since the year 2009. Traditional banks have succeeded in the past by adapting to earlier technological advancements such as online banking and digital payment systems, however cryptocurrency presents a different challenge. Their decentralized nature takes away from the primary role of traditional banking systems of acting as a middle-man. This study will explore how traditional banks have addressed the obstacles and opportunities introduced by cryptocurrencies and stablecoins by comparing responses from various institutions such as the Federal Reserve, European Central Bank, and the Bank of England. The study ultimately provides policy recommendations to guide banking institutions and regulators to find stable ground where both innovation and systemic infrastructure can coexist in an ever changing financial landscape.