- Deutsche Bank, one of the largest multinational investment banks in the world, believes digital currencies will replace cash.
- The bank stated that the coronavirus pandemic has played a significant role in the adoption of digital payments.
The research team of Deutsche Bank has reported that central bank digital currencies (CBDCs) are on the path to replace fiat currencies in the long-term. The report called ‘Konzept’ features an entire chapter about the promotion of digital currencies.
Central banks are slowly beginning to rethink the seventeenth-century cash model and accelerate the development of central bank digital currencies (CBDCs). But this is taking time, especially in advanced economies where interest rates are low and privacy is a major concern.
The report also mentions Sweden and China as the leaders in the CBDC space. Although both countries have different motivations, the common goal is the same. It seems that the development in the US and Europe is too slow right now despite the interest in cryptocurrencies shown by the United States in the past few years.
ECB plans a digital euro
During a virtual panel discussion on Thursday, the European Central Bank President, Christine Lagarde hinted at the possibility of creating a digital euro that could be launched in two to four years stating:
If it is going to facilitate cross-border payments, we should explore it. A digital euro will not be a substitute for cash.
Similarly, the Federal Reserve is also exploring the viability of a digital dollar. Randal Quarles, Vice Chair for Supervision at the Fed stated that the stance on digital currencies is still not formal.
Quarles also noted that the Fed has been interested in the possibility of a CBDC for quite some time. However, the US is still in its early stages when it comes to digital currencies adding that there are pilot projects already in place.
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