The takeaways of one of the largest global investment banks are all the more surprising because over the course of recent “cryptowinter”, most institutional investors lost their faith in the crypto industry. There can be only one conclusion here: the global financial elite is preparing a “reserve airfield” in case the U.S. dollar fails. The latest specialty research report of Bank of America, dedicated to the study and assessment of the digitalization of the global financial system, made a lot of noise on the Internet. Bank of America analyst said that digital currencies – primarily digital sovereign currencies of central bank accounts (CBDC) and stablecoins – have gained momentum and represent a natural evolution of money and payments.

“CBDC does not change the definition of money, but will likely change the way and timing of value appreciation over the next 15 years,” analyst Alkesh Shah wrote, adding that central bank digital currencies have “the potential to boost global financial systems and could be the most technological advances in the history of money.”

An important caveat: CBDC usually uses the same efficiency and cost-effectiveness assessment that real decentralized finance uses! It is hard to imagine a situation whereby the development of CBDC gains momentum, which for some reason does not completely capture the entire crypto industry.

The benefits and risks of CBDCs evolve with their size and nature of occurrence, but Bank of America expects central banks in Africa to focus on performance measurement and, in emergency countries, financial inclusion. However, CBDCs aren’t completely riskless. The specialty report states that they compete with bank deposits and threaten with a loss of monetary sovereignty and inequality between countries around the world.

In some countries, CBDC issuance may not be more than ten years old, but central banks are expected to “embrace technological advances or risk declining relevance in the foreseeable future,” the note says. The bottom line for Bank of America is that central banks and emissions are expected to drive innovation in digital assets across the private sector. It seems that only here the interests of states and ordinary citizens begin to correlate!

Despite honestly listing the benefits in the report, Bank of America is not optimistic that every country will issue a CBDC in the next few years, although it hopes that most central banks will try to keep pace with technological progress, as in what happened they “forecast loss of relevance in the expected future”. As already mentioned, it turned out that a large part of central banks and governments are teaming up with the private sector to expand innovation in the field of digital assets.

In general, most central banks around the world are in full swing in their quest to implement the digital paradigm. Dozens of them are moving forward with digital asset projects, despite the crypto industry's known problems with personal security and hacker attacks. For example, China has already introduced its CBDC in several cities, and the central government is said to be testing features such as time per transaction, where the token could theoretically expire if it is not used for a certain period of time.

As another example, on November 1, 2022, the Reserve Bank of India (RBI) expanded its use of eRupee by launching a wholesale CBDC pilot, followed by retail a month later. A trial run for interbank transfers has started in four cities and banks with a closed user group consisting of customers and merchants.

In addition, the Government of Canada announced its intention to start consultations on cryptocurrencies, stablecoins, digital currency central bank (CBDC) in accordance with the newly released mini-budget. This North American country's plans to sanction the seizure of territory in the group, part of the announcement titled “The solution to the problem of digitalization of money.”

In general, it is that the dangers, including the costs and risks associated with them, outweigh their benefits so that one day the system will become self-expanding, ultimately.