According to a Bloomberg report, Bank of America crypto strategists Andrew Moss and Alkesh Shah stated in a Monday note that CBDC is an inevitable progression of today’s digital currencies. The experts wrote:
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“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.”
Meanwhile, the Federal Reserve Bank (FRB) published a report on Thursday titled “Money and Payments: The U.S. Dollar in the Age of Digital Transformation” that examined the advantages and disadvantages of the U.S. adopting a CBDC. It looked into whether a CBDC could help consumers and businesses better the secure and effective domestic payments system as the payments system continues to grow, potentially leading to faster payment choices between nations.
Meanwhile, according to Shah and Moss, the use of virtual currencies generated by private companies 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.
U.S. central bank believes that their CBDC would be different
A CBDC, on the other hand, would be different in this regard because it would be the responsibility of a central bank, like the U.S. Federal Reserve.
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 comments on these topics until May 20.
A CBDC is a digital representation of fiat money, such as the U.S. dollar. The Bahamas launched the world’s first CBDC, the Sand Dollar, in 2020, bringing them into the limelight.
Meanwhile, as part of its efforts to build a digital currency, China’s central bank is constructing a digital yuan wallet. Sweden’s central bank finished the first phase of its “e-krona” digital currency trial in April 2021.
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