Introduction
Have you ever wondered what will be a lot of monetary system in the future, but Wait! What do I mean when I say monetary system?
Monetary system has to do with any group of people either in a institutional form or policy makers are any form of society that the society uses to control the supply of money and how it is being spent is known as monetary system.
Example of monetary system.
Central Banks who are responsible for how money is managed in the society, the commercial Banks which are institutions that accept deposits and provide other financial services for both individuals businesses and government.
There are also financial markets where business government and individuals buy and sell their assets like bonds stocks currencies as well as other commodities.
The payment system which are means or network that people use to transfer funds either through electronic payment system or any form of payment mechanism.
Monetary system also includes laws regulator that governing financial system and financial markets so in all monetary system play a pivotal role in enhancing economic transactions, allocating resources and maintaining financial stability and it increases economic growth for both business are individuals in the society.
Effect of digital currency and blockchain technology.
As technology advances on daily basis it's reshape monetary system, the invention of digital currency like Bitcoin and order cryptocurrency causes a form of challenge to the monetary system question the future of Fiat currency because this digital asset are decentralized and many financial application like supply chain management decentralized finance smart contract uses blockchain technology.
Due to the high rate of cryptocurrency adoption central banks worldwide have tried out digital currency known as CBDCs that's still work under the control and regulation of monetary system.
Due to the advancement of technology the whole world is gradually moving towards cashless society a system where you always make payment with your mobile app or digital wallet and this is really offering convenience and efficiency.
This cashless procedure reduces the risk of robbery that is associated with cash handling and it also reduces the risk of spreading counterfeit money in the society though it poses of challenges.
For example in my state many people do not have access to digital payment method and they find the difficult to sell their goods to people without cash.
The international monetary system.
The international monetary system play a vital role in enhancing thread and investment because they provide mechanism for currency exchange that enables countries engage in trading and this mechanism provided by international monetary system regulate exchange rate and promote efficiency in the payment system there by making it easier for anyone involving in cross border transactions.
The international monetary system ensures balance of equilibrium by managing imbalances with financial assistance of international monetary fund and currency adjustment and also coordinated policy measures.
International monetary system helps to promote financial stability using global institutions like international monetary fund to monitor economic trend, to monitor international corporation and to prevent systematic risk.
International monetary system create job opportunity which fuels technology advancement and infrastructural development that can help to promote economic growth.
Challenges facing monetary system.
Exchange rate to volatility is one complex challenge facing monetary system this fluctuation in currency values can be caused by increase of unemployment rate political events like replacement of a government and elections and also interest rate changes this places, this places business at risk of losing money which can result to inflation.
Financial crisis is a second challenge of monetary system according to history all financial crisis ever has always resulted to devaluation of currency that causes economic downturn in many countries.
This is majorly caused by excessive debt, inadequate regulatory oversight and this result is disaster because it causes high level of economic recessions and lost of jobs.
Future prospect of monetary system.
As technology advances it poses more challenges to the monetary system, web3 technology can give the monetary system a promising future if adopted because it will eliminate all intermediaries, it will increase privacy and security it can also increase transparency and trust in business, web3 technology will enhance financial inclusion.
By adopting blockchain technology, smart contracts web3 will bring solution to many challenges phasing monetary system.
Artificial intelligence can also help to enhance financial services by fishing out all fraudulent activities accurately and faster and also individuals can use artificial intelligence to to improve customers experience and satisfaction, artificial intelligence can reset how money is created used and this improving the monetary system.
Conclusion.
From the time money was invented monetary system has been working hard to met up with the trend, from trade by barter system to the use of coins and paper money there have been different challenges to deal with, in the future with the combination of digital and traditional finance, AI, web3 there will be solutions to monetary system challenges.
Note all images are originally mine.
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