Adoption Of Stablecoin Adoption And CBDC In The U.S. Is ‘Inevitable’, Says Bank Of America
The Bank of America believes that the United States will finally move forward with the creation of its own central bank digital currency (CBDC).
According to a report published by Bloomberg, Bank of America crypto strategists Andrew Moss and Alkesh Shah stated in a January 24 note that CBDCs “is an inevitable progression of today’s electronic currencies.”
The analysts wrote: “We expect stablecoin adoption and use for payments to increase significantly over the next several years as financial institutions explore digital asset custody and trading solutions and as payments companies incorporate blockchain technology into their platforms.”
On the other hand, the Federal Reserve Bank (FRB) published a report on January 20 titled “Money and Payments: The U.S. Dollar in the Age of Digital Transformation” in which the organization evaluated the benefits and challenges of the possibility of the U.S. adopting a CBDC.
In the report, the organization took into account whether a CBDC could possibly “improve the safe and effective domestic payments system” for households and businesses as “the payments system continues to evolve,” potentially causing “faster payment options between countries.”
Meanwhile, according to Shah and Moss, the use of digital currencies created by private enterprises is likely to increase. Currently, private businesses such as commercial banks bear liability for existing types of digital currency such as online bank accounts or payment apps.
A CBDC, on the other hand, would be different in this regard because it would be the responsibility of a central bank, such as the Federal Reserve, according to a statement released by the FRB in response to the report.
It also identified potential challenges, such as maintaining financial stability, protecting users’ privacy, and combating illicit transactions. The Federal Reserve has extended the deadline for public comment on these topics to May 20.
CBDCs are a digital form of the legal currency of the concerned countries such as the U.S. dollar. The prevalence and development of the concept of CBDCs began to emerge into the spotlight in 2020 with The Bahamas launching the first CBDC of the world called the “Sand Dollar.”
On the other hand, its own digital version of the yuan is currently being developed by the Central Bank of China – People Bank of China, in the form of a digital yuan wallet, as a part of its strategy to enhance its efforts to create a digital currency of its own.
And the first phase of its “e-krona” digital currency pilot was completed by Sweden’s central bank in April 2021.