Although US authorities continue to dabble with the idea of issuing their own central bank digital currency, the Bank of America believes such a product is “inevitable.” Additionally, researchers from the large banking organization see stablecoins continue to flourish and take a massive role in the monetary system.
Inevitable US CBDC?
CBDCs are a growing trend among central banks with numerous outlining plans to release such products. Very few already have digital versions of their national currencies. However, the US has always seemed somewhat lagging, with Fed Chair Jerome Powell claiming that the country has to do it right instead of being first.
Moreover, the world’s largest economy believes the China way will not work inside its borders. Nevertheless, certain reports claim from time to time that the US is making strides in looking at how to launch a CBDC.
The Bank of America believes that such a product will see the light of day in the US between 2025 and 2030. Citing bank strategists Alkesh Shah and Andrew Moss, Bloomberg reported that CBDCs “are an inevitable evolution of today’s electronic currencies.”
The Federal Reserve issued a report last week examining the pros and the cons that could come from a central bank digital currency. The paper said it could lead to faster settlements and less expensive transactions costs. On the other hand, CBDCs could work against people’s privacy as the governments can monitor and control the issuance and the transactions.
Stablecoins Will Continue Rising
Stablecoins are an essential part of the cryptocurrency industry, which is evident by their growth in the past few years to a multi-billion dollar portion of the market. As of now, there’re two such assets in the top five largest cryptocurrencies by market cap.
The strategists from the Bank of America believe this trend will only continue to increase in the following few years, especially if the US stalls with its CBDC.
“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.” – the note concluded.
Interestingly, Powell recently noted that CBDCs and stablecoin can coexist in a modern and digital economy.