Featured article by Suzy Crane, Independent Technology Author
The foreign exchange market gives traders a place to buy or sell currency pairs such as GBP/USD, depending on how they think one currency will fair against the other. Of course, it also has an impact on the foreign exchange rates that you will come across every day when moving money between countries. Naturally, the foreign exchange moving in one way or another can have a big effect on your finances or any money that you are sending abroad.
The rise of digital transactions within foreign exchange
In the world of digital transactions, the recent hot topic that you may be aware of is cryptocurrency. These number individual digital currencies such as Bitcoin, Ethereum and Ripple. They have risen in popularity and usage in recent years, with US market capitalization of $3.1bn being reported by July 2017. They differ from the traditional FIAT currencies such as British pounds and US dollars in that they are not controlled by central governments. This also means that they are not subject to any kind of monetary policies that individual governments may otherwise use to keep the global economy or individual currencies in check.
Of course, foreign exchange is all about moving money between countries effectively, and many hope that digital currencies may prove valuable here.
Issues when moving money between countries
When moving money between countries, there are a few issues to be aware of:
– The exchange rate – one major area that affects foreign exchanges of money is the exchange rates themselves. If you are involved with moving money between nations for personal or business reasons, then it is wise to always check the exchange rates before doing so. For cross-Atlantic monetary exchanges, you would always be best advised to compare exchange rates from the USA to UK as this will always get you the best deal for your money.
– Transaction costs – digital currencies could prove very handy for cross-country money transfers as they will usually have very low or maybe even no fees. Compare this to sending money to another country via a bank transfer and the difference in costs incurred are obvious. Many expect digital currencies such as Bitcoin to be used more and more for this reason.
– Speed of transaction – another area in foreign exchange that could see digital currencies fare better is the speed of payments being made within business or on a personal level. By sending money between countries digitally, you will not only get a much faster service than using banks but also one that is just as secure.
Greater integration by the foreign exchange
One significant way that the foreign exchange market is affecting digital currencies is that it is integrating them more and more. This not only gives you more access to them but also gives a greater level of trust in them from the public. As the foreign exchange market continues to bring digital currencies more into the fold, they will surely become more common as a result.
