One of the more worrisome side effects of the Brexit is how consumers are struggling to buy Pounds Sterling. After the price had dropped to its lowest point over 30 years, a lot of people started buying up Pounds en masse. Foreign currency providers are feeling the effects, as they have no stock to meet customer demand.
Scarcity in Fiat Currency Is Not A Positive Thing
Gold and Bitcoin are valuable – in part – due to their scarcity. But when foreign currency exchanges are running out of fiat currency, scarcity is not a favorable trait by any means. Photos are starting to surface on the Internet of long queue lines outside of currency exchange shops throughout the UK.
In fact, Thomas Cook is one of the companies suffering from this problem. The travel operator has to suspend their online currency sales due to the Pound Sterling continuing its value decline. According to the company, there was “unprecedented demand” late last night and throughout the day after the results of the Brexit became public.
Thomas Cook is focusing on fulfilling outstanding orders first, before accepting a new demand for Pound Sterling. But they aren’t the only ones running out of fiat currency, as the Commerce Bank of Australia is suffering from a similar fate. To make matters worse, the institution suspended all foreign exchange of the British pound until further notice.
TransferWise, one of the Fintech disruptors in the UK market, has suspended the transfer of Pound Sterling for the night as well. Travelex has gotten rid of its UK Price Promise, which would offer customers a refund if they found a better deal elsewhere. The demand for Pound Sterling was quite unexpected, albeit it is doubtful the demand will help push up the value shortly.
This is once again an example of how the traditional financial system is failing horribly. Customers can’t exchange funds or use the services they prefer due to a shortage of funds. This is quite strange, considering there should be plenty of bills to meet the demand. Most of that funds are held by banks, though, and they will not relinquish control over that funds anytime soon.
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