The United States is reportedly set to move forward with its plans of launching its own digital dollar or CBDC. As per a recent Bank of America report, the issuance would likely occur between 2025 and 2030.
According to a Bloomberg article, Bank of America crypto strategists Andrew Moss and Alkesh Shah wrote in a 24 January note that CBDCs “are an inevitable evolution of today’s electronic currencies.”
The analysts noted,
“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.”
Parallelly, a 20 January 20 report titled “Money and Payments: The U.S. Dollar in the Age of Digital Transformation” from the Federal Reserve Bank collated the pros and cons of the U.S. potentially adopting a CBDC.
The report highlighted that a CBDC could potentially serve as a “new foundation” for the payment system and a “bridge between different payment services,” both old and new. The report added that digital currencies could also “maintain the centrality of safe and trusted central bank money” in a rapidly digitizing economy.
Meanwhile, the analysts led by Alkesh Shah noted that a U.S. digital currency would preserve the dollar’s status as the world’s reserve currency, improve cross-border payments and increase financial inclusion.
Bank of America further said that the key considerations before issuing a CBDC are the need for it to be privacy-protected, intermediated, transferable, and identity-verified.
For now, stablecoins are likely to see an increase in usage in the absence of CBDCs, the bank noted. Their use as a means of payment is increasing, particularly for cross-border remittances, the report said, as they are faster and cheaper than using fiat currency.
Addressing the regulatory bits
The United States has always maintained a diplomatic stance on cryptocurrencies. Unlike most nations, there ain’t much regulatory in the States too. However, that might change soon.
As per a recent report, the Biden administration is preparing to release an initial government-wide strategy for digital assets as soon as next month and task federal agencies with assessing the risks and opportunities that they pose.
The report noted,
Senior administration officials have held multiple meetings on the plan, which is being drafted as an executive order.
It added,
The directive, which would be presented to President Joe Biden in the coming weeks, puts the White House at the center of Washington’s efforts to deal with cryptocurrencies.