Bank of America’s (BofA) research arm has released another report on virtual currency assets. Experts call the Central Bank Digital Currency (CBDC) the future of the currency and payment system. According to analysts, this asset class has the potential to revolutionize global financial mechanisms.
According to experts, CBDC (Central Bank Digital Currency) and Stavelcoin represent a natural evolution of the economic sector. Lead analyst Alkesh Shah believes that CBDCs will not change the definition of money, but they will change the way and timing of value transfer over the next 15 years. He added: These types of virtual assets could change the way the global financial ecosystem is viewed and could become the most significant technological advancement in the history of money.
According to experts, CBDCs primarily use blockchain technology to improve efficiency and reduce costs; Stabelcoins are digital coins whose value is associated with real assets such as U.S. dollars (USD) or precious metals like gold.
According to BofA analysts, the benefits and risks of CBDCs depend on the architecture and issuance model. Bank of America believed that central banks in developed and developing countries needed to focus on payment efficiency and financial inclusion for their customers when developing their own virtual currencies.
It was separately noted that CBDCs are not without risks. According to the report, they can lead to competition for bank deposits, which can lead to a loss of monetary sovereignty and inequality among countries around the world.
Some countries will not be allowed to issue CBDCs for the next decade. Nevertheless, the U.S. banking researchers stressed that eventually all central banks will “embrace technological advances or risk losing relevance in the long run.” All results could not be downloaded.