Bank of America Strategists Call US CBDC As “Inevitable Evolution”
The Bank of America has said that a central bank digital currency (CBDC) for the U.S. is “inevitable”, Bloomberg writes.
Crypto strategists Alkesh Shah and Andrew Moss from the bank wrote in a report Monday, stating that a digital dollar is an “inevitable evolution of today’s electronic currencies.” They have predicted the rollout to be available sometime between 2025 to 2030.
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They see the necessity of a digital dollar as it would differ from existing digital money available to the general public because it would be a liability of the central bank. This could mean that there would be no liquidity risks for the digital dollar.
If not a U.S. CBDC, stablecoins such as Tether or USD Coin, both pegged to the US Dollar, will “likely flourish” in the near future, the analysts predicted.
“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,” they wrote.
The timely arrival of opinions from crypto experts on the U.S. CBDC denotes that the country is doing the spadework in preparation for the launch.
BofA’s Pro-Crypto Moves
Bank of America has been showing a constructive outlook when it comes to crypto trials and experiments.
The bank launched crypto research in October 2021, amid “growing institutional interest.”
“This isn’t just Bitcoin anymore, this is digital assets and it’s creating a whole ecosystem of new companies, new opportunities, and new applications,” Candace Browning, head of global research at BofA Securities told Bloomberg.
The research was launched along with the publication of a report that looked through various use cases of cryptos including tokens, applications powered by smart contracts, CBDCs, stablecoins, and NFTs.
BofA has also kept its eye on non-fungible tokens (NFTs), recognizing their potential use cases. Anto Paroian, chief operating officer at crypto/digital assets hedge fund ARK36 told at the time,
“The most interesting thing to note is that the [report] explicitly mentions NFTs as one of the current drivers of the digital asset market.”
The bank also showed interest in the metaverse, calling it a “massive opportunity“, resulting in widespread crypto adoption.
The US CBDC Still Underway
The U.S. has been tirelessly carrying out efforts to enter the CBDC fold. For instance, the Fed released a highly anticipated digital dollar report recently that although talked about the pros and cons of a CBDC, did not give firm timelines.
The Fed has also clearly stated in the report that it “does not intend” to issue a digital dollar anytime soon.
While the report was welcomed by many crypto enthusiasts, lawmakers were critical of the Fed’s CBDC progress. Republican U.S. Senator Cynthia Lummis, a leading digital currency supporter, said in a tweet that she is “undecided” whether there is a need for a CBDC or not.
I’m genuinely undecided whether there is a legitimate need for a CBDC when we have stablecoins, and I look forward to working with Chair Powell and Governor Brainard to figure this out.
— Senator Cynthia Lummis (@SenLummis) January 20, 2022
The Biden administration on Monday announced that it is drafting an executive order for a government-wide crypto strategy.
A CBDC could carry an array of advantages including speeding up payments globally and allowing consumers access to the financial system. Even so, the Fed cautioned that a poorly designed digital dollar could weaken banks, creating privacy concerns.