Bank of America rated the CBDC of the Central Bank as “a payment system much more effective than cash”, in a research article published Wednesday according to James Rubin en Coindesk.
The Charlotte, North Carolina-based bank, the second-largest in the US by total assets, said CBDCs could “replace cash entirely in the (distant) future.”
The report comes amid growing interest among central banks. A May report from the blockchain infrastructure platform Bison Trails found that around 80% of central banks are exploring use cases involving CBDC, and the 40% It is done testing programs proof of concept.
Bank of America said the adoption of CBDC was “inevitable”, citing a declining role for cash, the increasing use of blockchain technology by the private sector, the loss of control over the currency, and the potential for CBDCs to boost the economy. He also noted that central banks that did not launch their own digital currencies could see declining demand for their currencies, “substantially in some cases” and a smaller “global role”.
By addressing concerns that a CBDC could compete with bank deposits, stimulate bank runs and compromise individual security, the document highlighted the “very cautious approach” of central banks.
The document said that the CBDC qualified as money “by allowing the storage of value and being a unit of account and medium of exchange”, Differentiating them from cryptocurrencies that “Do not meet these criteria. “Since they are traded, they could be seen as an asset class,” the newspaper said.
Bank of America said that CBDCs could lessen the need for stable coins, and noted that the latter could “present a significant risk to financial stability during times of market stress when there may be a run between crypto and fiat currency.”
In recent months, Bank of America has reinforced its own commitment to providing more cryptocurrency services and exploring the potential of cryptocurrencies.
The bank has created a team dedicated to researching cryptocurrencies and related technologies, according to a note reviewed by CoinDesk earlier this month. Separately, it has also approved the trade of bitcoin futures for some clients, and their lead brokerage unit has begun clearing and settlement of cryptocurrency exchange traded products (ETP) for hedge funds in Europe.
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