2020-10-1 18:30 |
A new report by Deutsche Bank has acknowledged the potential of Central Bank Digital Currencies (CBDCs) to disrupt the US dollar's dominance as the most held reserve currency. This is not the first research that highlights such a possibility; previous reports by Bloomberg and German think tank, DGEN, have speculated similar situations as more Central Banks evaluate the feasibility of a CBDC.
The report, which is dubbed ‘Central Bank Digital Currencies; Money reinvented,’ was released in September and particularly highlighted that CBDCs could ‘erode the dollar’s primacy in the global financial market.’ Currently, the U.S dollar is involved in over 90% of global transactions and has been the world’s reserve currency since abolishing the gold standard.
This dominance is, however, at a threat given a sudden spike in CBDC interest and their value proposition to individual jurisdictions when it comes to oversight and bilateral trade. China, which appears to have taken the lead, is already piloting its digital yuan (e-RMB) in several cities, including Hong Kong and Beijing; the initiative began back in 2014 but was accelerated previously following Facebook’s intentions to launch Libra.
Though still at its early stages, the ongoing global tech wars seem to be in line with the digital yuans' purpose as China looks to challenge the U.S economic supremacy. Deutsche Bank’s Chief Investment strategist, Gerit Heinz, told Coindesk that,
“The e-RMB and the Belt and Road Initiative would give China a chance to increase the importance of that currency overall … That could also imply some changes in the global reserve system.”
The report goes on to mention that around 80% of the world’s central banks have already begun active research into potential CBDCs. However, progress has been different for some countries already in the development and implementation phases. That said, Europe is also considering a digital Euro, although its progress is far behind compared to China. Heinz was keen to point out that societal underpinnings such as a democratic approach should have placed the continent ahead,
“In Europe, I would expect a lot of discussions about this. The euro, introduced as a currency decades ago, has triggered a lot of discussions.
So CBDC in a euro system of different countries would, of course, imply much more discussion than in a bigger, more centralized country like China.”
Being a relatively new concept, this report by Deutsche bank also highlighted that the current verifiable evidence is not sufficient enough to make conclusive speculations. Nonetheless, the bank noted it would follow CBDC developments more actively to provide informed updates on the impact of this upcoming class of legal tenders.
The post CBDCs Are A Threat to The US Dollar's Reign As The World's Reserve Currency: Deutsche Bank Report first appeared on BitcoinExchangeGuide.
origin »Time New Bank (TNB) на Currencies.ru
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