The crypto industry is growing with every passing day, which has attracted major institutions. Many institutions are enthusiastically exploring the potential future of digital assets and the possibility of their adoption in the coming times. One such enthusiastic institution is the Bank of America (BoA).
Sources reveal that Alkesh Shah, an analyst of the bank, commented that the central bank digital currencies (CBDCs) and stablecoins as a natural evolution of money and a significant factor in how the money will be defined in the future.
According to the report, the analysts’ research note stressed that CBDCs could “revolutionize global financial systems and might be the most significant technological advancement in the history of money.”
The report also specified that digital assets are going to change the definition of money but would bring alterations. In their words:
“CBDCs do not change the definition of money, but will likely change how and when value is transferred over the next 15 years.”
In addition, the bank 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. However, the team admits that this form of currency possesses certain risks that could still present the risk of driving competition with bank deposits, a loss of monetary sovereignty, as well as fostering inequality among nations.
Simultaneously, the bank is not very optimistic that all countries would introduce CBDCs within the next decade but still highlights that central banks should keep up with technological advances or else there is a chance they would “risk irrelevance over the longer term.”
The analysts’ note in the report concludes that national authorities and central banks worldwide are expected to lean on the private sector to drive innovation in digital assets such as CBDCs and stablecoins.
BoA is one of those institutions that has carried a positive stance on crypto and digital assets. In May, Brian Moynihan, the CEO of the BoA, said that the bank 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.
In August, BoA also appreciated the upcoming update of Ethereum. It stated that the switch from a proof of work (PoW) consensus mechanism to proof of stake (PoS) was expected in mid-September. The transition from a PoW consensus mechanism to PoS appears to be imminent.
The bank had also claimed that PoS lowers entry barriers for investors to create income as network validators, decreases Ethereum’s energy usage by over 99 percent, and modifies ETH’s supply/demand dynamics.
Several banks have enthusiastically looked up to the idea of digital assets for cross-border transactions. For example, J.P. Morgan, a multinational bank in collaboration with the central bank of Singapore, participated in its first-ever decentralized finance (DeFi) transaction. According to the Monetary Authority of Singapore (MAS), the transaction was one of many to announce the commencement of Project Guardian.
According to MAS, the pilot program aims to identify the potential use cases of DeFi applications in the financial markets. Additionally, it was an asset tokenization and international transfer experiment.