A current report from the Bank of America forecasters mentioned that a CBDC & stablecoin would differ from digital currencies that are presently available because it would be the liability of the Federal Reserve, not any commercial bank. This is one of the biggest news to create a storm in the world of cryptocurrency because, for the first time in a very long time, there is a talk about some potential currency that could surpass the dominance of other forms of crypto.
The United States of America will finally move a bit forward into the future and create its very own digital currency based on the Central Bank. According to the Bank of America, this will be known as the Central Bank Digital Currency or CBDC along with stablecoin.
Bank of America crypto strategists Andrew Moss and Alkesh Shah wrote in a note on January 24 that CBDCs are “an inevitable evolution of today’s electronic currencies,” according to a Bloomberg report. The analysts wrote: “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, a report on January 20 titled “Money and Payments: The U.S. Dollar in the Age of Digital Transformation” from the Federal Reserve Bank (FRB) weighed up the benefits and disadvantages of the U.S. potentially adopting a CBDC & stablecoin. There are different benefits of introducing cryptocurrencies like CBDC & stablecoin for the world of crypto. There is no doubt that with the inclusion of this new form of digital currency, there will be a new way of making payments and ensuring the security of the assets for people.
Potential Benefits of Adopting CBDC & stablecoin for America
It considered whether a CBDC could potentially “improve the safe and effective domestic payments system” for households and businesses as “the payments system continues to evolve,” possibly resulting in “faster payment options between countries.”
In the meantime, Shah and Moss stated that the use of digital currencies issued by private companies is likely to grow. Currently, the liability for existing forms of digital currency like online bank accounts or payment apps belongs to private entities, such as commercial banks. Hence, these currencies don’t remain in a loyal position for the customers and users in the first. Place.
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However, a CBDC would be different in this respect because it would be the liability of a central bank such as the Federal Reserve, wrote the FRB in a statement about the report. Being a liability to the Federal Reserve, a central institution, there will be more reliability and functionality when it comes to this particular digital currency. As a result, it will be more effective in asserting dominance in the crypto world.
It also pointed out potential difficulties, including preserving financial stability, protecting users’ privacy, and combatting illicit transactions. The Fed has opened to the floor for public comment on these issues until May 20.
A CBDC is a digital version of a country’s fiat currency, such as the U.S. dollar. Other counties have already created their very own CBDC, and America is finally joining that list as well. These currencies started to step into the spotlight during 2020 when The Bahamas launched the world’s first CBDC, the “Sand Dollar.” Meanwhile, China’s central bank is developing a digital yuan wallet as it steps up its efforts to create a digital currency. In April 2021, Sweden’s central bank completed the first phase of its “e-krona” digital currency pilot. If things go well on the American front, pretty soon, the first CBDC for America will be launched as well.
