According to the latest research from Bank of America, the bank thinks of CBDCs (central bank digital currencies) and other virtual currencies represent the future for payments and money.
According to the team led by Alkesh Shah, while CBDCs probably won’t change how money is defined, over the next 15 years, they will have an impact over when and how value is transferred. The analysts added that CBDCs can potentially revolutionize the finance industry worldwide and may represent the most important tech improvement in money’s history.
Usually, central bank digital currencies are based on blockchain tech in order to grow their efficiency and cut down costs. Stablecoins are types of crypto that have a value pegged to assets such as gold or USD.
CBDCs come with particular risks and benefits that depend on how they are designed and issued. However, BofA believes that developed countries and their central banks will focus on the efficiency of payments. On the other hand, developing economies can use CBDCs to place financial inclusion at the centre of attention.
The research also mentions the risks coming with CBDCs, which include encouraging bank deposits competition. Also monetary sovereignty can be lost and inequality between global countries may rise.
Some countries may have to wait more than 10 years to issue CBDCs, however the research mentions expectations that central banks will adopt tech advancements and find alternatives to risks in the long term.