According to analysts at Deutsche Bank, government cryptocurrencies will replace cash. Central Bank digital currencies can also eliminate intermediaries in the banking system, which will have serious consequences.
In a report released this week, Deutsche Bank analysts listed economic assessments and proposals to help the global economies hit by the COVID-19 pandemic. The report, which contains sections related to protecting the environment and protecting small businesses, also discusses the transition to digital currencies, including government ones.
Citing “cash came under scrutiny during the pandemic,” due to fears of transmission of the virus, Deutsche Bank macro strategist Marion Laboure writes about the need to “push” digital currencies to keep up with countries that are already doing it.
As China’s state-owned cryptocurrency DCEP and Sweden’s digital crown are being actively tested, other countries need to speed up the release of their own digital currencies, according to the report. Otherwise, the private sector will use digital currencies that are available first, including government cryptocurrencies.
However, according to Labourt, development is very slow in most developed countries, and many central banks are only now beginning to “rethink the seventeenth century cash model” and investigate government cryptocurrencies. So in October, the chairman of the US Federal Reserve System (FRS) Jerome Powell (Jerome Powell) said that the digital dollar is not a priority for the country, and the European Central Bank (ECB) this month just began to study public opinion on the issue of the digital euro.
The development of a state-owned cryptocurrency has turned into a race between world leaders, while the United States is still far behind China. As a reminder, back in January, the central banks of Canada, Great Britain, Japan, Sweden and Switzerland, the ECB and the Bank for International Settlements (BIS) created a task force to jointly research government cryptocurrencies.
Deutsche Bank analysts believe that “sooner or later government cryptocurrencies will replace cash.” Deutsche Bank details how the central banks of many developed countries face strong user attachment to cash, mainly due to privacy concerns of digital currencies.
Labour notes that such “cultural / privacy norms” need to be “overcome” in the development of a government cryptocurrency. Research conducted by Deutsche Bank has shown that cash will never disappear, according to many people.
According to analysts, state-owned cryptocurrencies “can help get rid of intermediaries in the banking system,” as clients keep their money directly at the Central Bank, and not in a private bank. In this case, the global banking sector with a multi-million dollar turnover may be approaching the end of its existence, and this has serious financial and economic consequences.