Even as the cryptocurrency industry has suffered big losses in regulatory credibility and hacks in recent months, a major financial institution continues to believe the future of money lies in a transformational asset class—central bank digital currencies (CBDC).
Case in point: The second largest bank in the United States, Bank of America, believes that digital assets will change the way we interact with money and payments. In a research report released on Tuesday, the bank’s crypto analysts described CBDCs and stablecoins as “the natural evolution of money and payments.”
The bank’s analysts went on to add that central bank digital currencies have “the potential to revolutionize global financial systems and may be the most significant technological breakthrough in the history of money,” extolling many of the same virtues of CBDCs since this new idea of money first picked up real support a half decade ago.
The pliability and anti-money laundering benefits of CBDCs are well theorized and will depend on their design and issuance. However, these developments are not without risk. According to the note, CBDCs could still pose risks such as fueling competition with bank deposits, leading to a loss of monetary sovereignty, and inequality between countries globally. It may also hurt the financially disenfranchised which tend to use cash payments at a greater frequency than the general public.