Indeed, the BoA’s analysts led by Alkesh Shah have singled out central bank digital currencies (CBDCs) and stablecoins as a the natural evolution of money and a significant factor in how money will be defined in the future, CoinDesk’s Will Canny reported on January 17.
Most significant tech advancement for money
According to the report, the analysts’ research note stressed that CBDCs could “revolutionize global financial systems and may be the most significant technological advancement in the history of money.” As they specified: Furthermore, the BoA projects that financial authorities and central banks in developed and developing countries will recognize the potential of higher efficiency and lower costs offered by CBDCs. Having said that, the team admits that this form of currency could still present the risk of driving competition with bank deposits, a loss of monetary sovereignty, as well as fostering inequality among nations. At the same time, the BoA isn’t optimistic that all countries would introduce CBDCs within the next decade, but still highlights that central banks should keep up with technological advances, otherwise they “risk irrelevance over the longer term.” Finally, the note concludes that nations’ authorities and central banks around the world are expected to lean on the private sector in order to drive innovation in the sphere of digital assets such as CBDCs and stablecoins.
Existing institutional efforts
Meanwhile, Finbold reported in November 2022 on the plans of the Bank for International Settlements (BIS) to explore cross-border settlement and trading involving CBDCs powered by decentralized finance (DeFi) protocols. As for the BoA, its CEO Brian Moynihan said in May 2022 that the BoA had “hundreds of patents on blockchain as a process and as a tool and as a technology,” but that regulation was preventing any progress of banks in the crypto sector. Earlier in April, BoA chief investment strategist Michael Hartnett warned that the decline of the macro-economic situation could lead to recession shock in the United States, which would see cash, volatility, commodities and cryptocurrencies outperform bonds and stocks.
