A recent note from Bank of America analysts said that a CBDC would differ from digital currencies currently available because it would be the liability of the Federal Reserve, not a commercial bank.

It appears that the U.S. will finally be moving forward to create its own central bank digital currency (CBDC) according to the Bank of America.

Bank of America crypto strategists Andrew Moss and Alkesh Shah wrote in a Jan. 24 note 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 Jan. 20 report 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.

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.

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.

It also pointed out potential difficulties including preserving financial stability, protecting the privacy of users, 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. They 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 in the process of 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.

Cryptos feed Join Telegram

Recommended content


Recommended Content

Editors’ Picks

Cardano whales enter buying spree before the Vasil hard fork

Cardano whales enter buying spree before the Vasil hard fork

Cardano price is showing an interesting set up as it struggles to make a move above a crucial support level. A rejection here could lead to a buying opportunity for patient investors before ADA explodes.

More Cardano News

Why Dogecoin enters 50% bull rally despite founder’s remarks on Elon Musk

Why Dogecoin enters 50% bull rally despite founder’s remarks on Elon Musk

Dogecoin price has been coiling up like a spring for roughly ten days, indicating that a massive move is about to occur. The congestion will likely lead to a bullish move for DOGE that is brimming with volatility.

More Dogecoin News

SafeMoon price readies for a 40% breakout

SafeMoon price readies for a 40% breakout

A brief technical and on-chain analysis on SafeMoon price. Here, FXStreet's analysts evaluate where SFM could be heading next.

More SafeMoon News

Why a 20% rally for Crypto.com price makes sense now

Why a 20% rally for Crypto.com price makes sense now

Crypto.com price is on the verge of flipping a crucial resistance barrier into a support level. Assuming this conversion occurs, CRO will be primed for a quick expansion to the next hurdle.

More Crypto.com News

Bitcoin: The last rebound before capitulation

Bitcoin: The last rebound before capitulation

Bitcoin is showing bullish signs in the lower time frames, which can be taken advantage of by traders in the next couple of days. But looking at BTC from the higher time frames suggests that the bottom is not in yet.

Read full analysis

BTC

ETH

XRP