‘CBDCs can revolutionize the global financial system’: Bank of America

CBDCs can revolutionize the global financial system Bank of America

‘CBDCs can revolutionize the global financial system’: Bank of America

Bank of America stated that the stablecoins, central bank digital currencies (CBDCs), will evolve how money and payments function. They will be the natural evolution of the financial system. 

Global Crypto and Digital Asset Strategist Alkesh Shah wrote, “CBDCs do not change the definition of money, but will likely change how and when value is transferred over the next 15 years.”He added that CBDCs  have the “Potential to revolutionize global financial systems and may be the most significant technological advancement in the history of money.”

Blockchain technolgy increases efficiency and lowers cost, and CBDCs function on blockchain technology. Whereas, stablecoins are kind of cryptocurrencies, their values are tied to another assets, for example gold or U.S dollars.

CBDCs too have risks and benefits that depends on their design and issuance. However, Bank of America suggests other countries’ central banks, be it developed or developing economies, to focus on  the potential of CBDCs for payments efficiency and financial inclusion. 

The note by the American central bank also informed that CBDCs too comes with their risks, they may compete with bank deposits, may also bring inequality among countries and could lead to deprivation of monetary sovereignty. 

With the help of private sector, government and public sector can drive innovation, according to the bank of America. 

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