Although the US Fed has only made mention of issuing a central bank-issued digital currency (CBDC), the Bank of America (BofA) asserts that the product is “inevitable.” Also, BofA researchers argue that stablecoins continue to bloom and become more integral to the monetary system.
CBDCs have become a common topic in central bank circles, with many having released or planning to launch one soon. China maintains the lead in the CBDC race, with its digital yuan being the best CBDC product so far. However, the US Fed appears to be lagging in this scene, with Fed Chair Jerome Powell arguing that it is better to “do it right instead of being first.”
Also, the world power believes that the “China way” will not suit the US dynamics well. Nonetheless, sources familiar with the issue note that the US continues to make efforts to figure out how to launch a CBDC.
That said, the Bank of America believes that this CBDC could come into existence in the US anything between 2025 and 2030. Referencing comments from Alkesh Shah and Andrew Moss, Bloomberg recently reported that CBDCs “is an inevitable evolution of today’s electronic currencies.”
Meanwhile, the Federal Reserve recently released a report, which Learn2Trade reported on, about the pros and cons of having a central bank digital currency. The paper detailed that it could help develop faster settlements and inexpensive transaction costs. However, many have argued that a US Fed-issued CBDC could be anti-privacy for the people as the bank can control and monitor transactions.
US Fed CBDC Delay Only Makes Stablecoins Stronger
In other news, stablecoins have become increasingly critical to the financial space recently, which is evident in the meteoric growth recorded in the stablecoin space over the past few years.
BofA strategists assert that this upward trend will only continue in the coming years, especially if the US delays releasing a CBDC. The strategists noted in their report:
“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.”
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