Central Banks Embracing CBDCs But Digital Dollar Seen Far Off, Says BofA

BySamson Ononeme

Nov 15, 2023 ,
Central Banks Embracing CBDCs But Digital Dollar Seen Far Off, Says BofA

Key Inflation

  • Majority of central banks globally are exploring issuing CBDCs according to BofA report.
  • However, analysts believe a US CBDC is unlikely in near term without Congressional and executive support.
  • Long-term promise remains for CBDCs to improve payments, monetary policy, and financial access.

Central bank digital currencies (CBDCs) are gaining momentum globally, with most countries now studying or developing government-backed digital money, according to a new Bank of America report. However, analysts say a digital dollar is not imminent despite the broader CBDC push.

The report found that central banks representing 67% of nations and 98% of worldwide GDP are currently exploring CBDCs. Over one-third are in advanced development stages.

US Federal Reserve is unlikely to launch a digital dollar

But BofA believes the US Federal Reserve is unlikely to launch a digital currency soon without support from Congress and the executive branch. The Fed is running CBDC pilots but has not committed to issuance.

While potentially transformative, analysts caution CBDCs also carry risks like disintermediating banks and enabling bank runs. International power dynamics could also shift depending on which countries develop CBDCs first.

However, BofA remains bullish on the long-term promise of CBDCs to enhance monetary policy, cross-border payments, and financial inclusion. The bank expects the private sector to partner closely with governments on CBDC infrastructure and design.

Read also! IMF Chief Sees CBDC Replacing Cash But Adoption Will Take Time

Recent CBDC developments include the Swiss National Bank collaborating with commercial banks on a wholesale CBDC pilot. But without an executive order, the US is seen lagging many other advanced economies in rolling out a digital currency.

So while CBDCs appear poised to reshape global finance in the years ahead, Americans may have to wait longer than most for a digital dollar. Yet with the majority of central banks now onboard, broad CBDC proliferation seems inevitable according to experts.

Samson Ononeme

Meet Samson Ononeme, a dynamic writer, editor, and CEO of marketsxplora.com. With a passion for words and a sharp business acumen, Samson captivates readers with captivating storytelling and delivers insightful market analysis. He is a trailblazer in the finance industry, empowering individuals with knowledge and shaping the narrative of money. Get ready to be inspired by his literary prowess and entrepreneurial leadership.

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