Bank of America: Stablecoin adoption and CBDC rollout are 'inevitable'

Time:2022-01-24 Source: 812 views Trending Copy share

A recent report from Bank of America analysts said that a CBDC would be different from current digital currencies because it would be the responsibility of the Federal Reserve, not commercial banks.

According to Bank of America, the United States appears to be finally moving forward with creating its own central bank digital currency (CBDC).

Bank of America crypto strategists Andrew Moss and Alkesh Shah wrote in a Jan. 24 report that CBDCs “are an inevitable evolution of today’s digital currencies,” according to Bloomberg. Two analysts wrote:

“We expect the adoption and use of stablecoins to increase significantly over the next few years as financial institutions explore digital asset custody and trading solutions, and payments companies incorporate blockchain technology into their platforms.”

Meanwhile, the U.S. Federal Reserve Bank (FRB) published a report on Jan. 20 titled “Money and Payments: The U.S. Dollar in the Age of Digital Transformation,” weighing the pros and cons of a possible U.S. adoption of a CBDC.

It considered whether a CBDC could potentially "improve a safe and efficient domestic payment system" for households and businesses, potentially leading to "faster payment options between countries" as "the payment system continues to evolve."

Meanwhile, Shah and Moss said the use of digital currencies issued by private companies is likely to grow. Currently, the responsibility for existing forms of digital currencies such as online bank accounts or payment applications rests with private entities such as commercial banks.

However, a CBDC would be different in this regard, as it would be the responsibility of central banks such as the Federal Reserve, the FRB wrote in a statement on the report.

It also pointed to potential difficulties, including maintaining financial stability, protecting user privacy and cracking down on illegal transactions. The Fed has asked the public for comment on these issues through May 20.

A CBDC is a digital version of a country’s fiat currency, such as the U.S. dollar. In 2020, the Bahamas launched the world's first CBDC, the "Sand Dollar", and CBDC began to attract attention.

Meanwhile, China's central bank is developing a digital yuan wallet to ramp up efforts to create a digital currency. In April 2021, Sweden's central bank completed the first phase of its "e-krona" digital currency pilot.

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