One important benefit from Digital Currencies (DCs) is in its immunity to exchange rate fluctuations and control excercised that one sees in fiat currencies. A simple scenario will illustrate my view point. A seller, of good valued at 100 units of DC, given a 30 day payment term will receive 100 units on the date the payment is due. The assumption here is the transaction is denominated in DCs. The cross currency movements, acts of government are perfectly hedged, rather non existent. This is made possible by the peer to peer attribute and ubiquitous ownership.

In the report from BCG on transaction banking titled 'The Transaction Banking Advantage: The Path to Profitable Growth", 2012' it says GDP growth is estimated at 275% while total trade will grow by 440% for the period range from 2001 to 2020. For the period from 2011 to 2020, the revenue pool for the banks is estimated to grow by 80%. The revenue from 'open account' financing is estimated to grow three fold from 2011 to 2020. (For exact dollar numbers please read the report). And what if the 'open account' financing is snatched away from banks? The revenue potential will shift to the intermediaries or better will be a cost saving to the seller and the buyer. What best than by DCs.

We live in a global village. There are trade collaboration groups such as NAFTA, ASEAN and SAARC. The intra trade barriers for the member countries are relaxed; the reality is manufacturing has shifted to the 'East' and the 'West' is leveraging the cost of production arbitrage with efficient supply chain mechanism. This has been taking shape and will only grow resting on the premise that banks or intermediaries will be the channels for fueling the growth and transactions will occur in fiat currency.

Trade has four primary dimensions to it. Risk management, Financing, Payments / settlement and Information. I will briefly explain in a very simplistic way, each of these

Risk Management: Non delivery / defective of goods by the seller or Non-payment / part payment by the buyer – Banks / financial institutions play a major role in mitigation. One way is by issuing Documentary Credits.

Financing: The pre-shipment and post-shipment financing to keep the working capital lifecycle in smooth motion by providing liquidity.

Payments / settlements: The banks were the only channel to receive monies from the buyer and deposit it into the account of the seller.

Information: This can be seen as an extension of 'risk Management'. Information on sellers, buyers, goods while in transit, goods quality description etc. The lack of information enhanced risk. The new information age that we live in has mitigated this risk.

The last decade has been exciting for technology and its implications to business. The developments have transferred the power to the end users, be it corporates or individuals. 'Information' is in abundance and available real time on the buyer or seller or goods in transit. Communication is so much faster and easier, making risk manageable. All this has made disintermediation of financing and payments / settlement by alternate sources possible. The banking services that was an exclusive preserve of banks is now disrupted and dispersed. With the advent of DCs the digital revolution will be near complete freeing one important barrier to cross border transaction banking. Is this good or bad? Only time will say. However the hot bed of innovation in payments and digital spaces will keep our lives exciting when free of controls and intervention. This will be the final frontier for global free trade. The banks once again as it the days of yore can start issuing DCs. The value will be a function of soundness of the bank.