The Federal Reserve has previously emphasized that it is not important to develop a sovereign digital currency first.
From Bank of America’s point of view, the US plans to introduce central bank-backed digital currencies by 2030. Banks consider US central bank issuance of digital currencies “inevitable”, despite ongoing debate over its viability by financial authorities and lawmakers .
Bloomberg Yesterday, the Investment Financial Services Bank reported that it believes that a central bank digital currency is different from existing digital currencies. It is governed primarily by the Federal Reserve and is not under the control of other commercial banking institutions.
Today, many countries around the world are enjoying the idea of central bank digital currencies. Some, such as the Bahamas, have already adopted cryptocurrencies, while others, such as China, South Korea and Sweden, have made great strides.
But the United States has not yet done the same, and Federal Reserve Chairman Jerome Powell confirmed that the Fed will take time to develop digital currencies.
Stablecoins will not be phased out
A report compiled by two banking analysts, Andrew Moss and Alaksh Shah, shows that the stablecoin rebellion cannot be tolerated. The pair added that these cryptocurrencies have seen greater use over the years and will solidify their position in the currency system if the US lags behind in CBDC development.
“”The use of stablecoins and payment usage is expected to increase exponentially over the next few years as financial institutions seek digital asset storage and trading solutions, and payment companies integrate blockchain technology into their platforms. ..” Section of the report quoted by Bloomberg read.
Notably, Powell revealed earlier this month that both central bank digital currency and privately issued stablecoins may be present in the US financial system. …at a Senate Banking Committee hearing, Powell made clear that the two are not mutually exclusive and can be used in the same system.
Challenges and Benefits of CBD in the United States
Moss and Shah noted that digital currencies issued by private companies will likely continue to be used. They also recognized three potential issues that impeded the adoption of the Convention on Biological Diversity. – Financial instability, user privacy and illegal transactions.
The Bank of America report was less than a week old when the Federal Reserve released a report investigating the pros and cons of cryptocurrency adoption.
The 40-page report, “Money and Payments: US Dollars in the Age of Digital Transformation,” explored the uses and capabilities of CBDCs, as well as related potential risks and policy considerations.
The Federal Reserve’s report, released last Thursday, outlines the main benefits of a central bank digital currency: lower transaction costs and faster payments. He also stressed that the infringement of user privacy is the biggest flaw, as the government controls the issuance of digital currency to the central bank.
South Korea concludes first round of CBDC practice exam
Elsewhere, Yonhap News Agency reported yesterday that the Bank of Korea has completed the first of its two-stage CBDC pilot program. The first phase started in August and lasted until December. The final phase is currently underway and will be completed by June.
The former focuses on key features of digital currencies, while the latter focuses on real-world use cases of digital currencies, including cross-border transfers, retail and offline payments. In this second phase, banks have been reported to be engaging other institutions.
If this stage is completed successfully, the Bank will consider the deployment plan.