The world is preparing for the upcoming four-day holiday weekend. During this rare occurrence, banks and trading markets can be closed for up to 96 hours. In the United States there are some laws that limit this to 72 hours, but not so many in Europe. The European Central Bank (ECB) and local central banks are closed on weekends and public holidays, meaning that transactions on Thursday evening won’t be processed until Tuesday morning. This was also was discussed in another post covering TARGET2 (Trans-European Automated Real-time Gross Settlement Express Transfer System).
The following will help to get an idea of the impact that the previous has. The old-fashioned payment system already led to Dutch retailers slamming banks for not processing any transactions during the long weekend. The Dutch retail association director, Jan Meerman, claimed that “Retail sales amount to some € 500m over the Easter weekend” and “If someone buys something on Thursday evening, that money will be taken off their account immediately but the shopkeeper won’t see the money in his bank account until Tuesday.” As this concerns Dutch retailers only, it can be assumed European retailers will have to wait for several billion Euros in total Easter sales to become available. Numbers such as these can mean retailers will miss out on a lot of liquidity and many millions of interest during this holiday period alone. On an annual basis, banks are closed for about 110 days in total.
Cryptocurrencies don’t face this problem, as they can be transferred anywhere at any time. They could therefore potentially replace the outdated TARGET2 system. The European landscape currently consists of not only TARGET2, but also the Single Euro Payments Area (SEPA). It was discussed earlier that cryptocurrencies can produce the same benefits and more. For those who were still unconvinced about the potential economic impact of cryptocurrencies, the combined impact of potentially replacing SEPA and TARGET2 should show that it is not unrealistic to assume cryptocurrencies can save their users $30 or even $210 billion.