For RBC Wealth Management, the Federal Reserve does not have sufficient motivation to accelerate its projects in the field of CBDC. Visit central bank should therefore take its time and focus on an incremental approach.
According to the Bank for International Settlements, the majority of central bankers (93%) are today “engaged in some form of work” around central bank digital currencies.
However, projects are slow to materialize, particularly in the most developed economies. For analyst Atul Bhatia of Royal Bank of CanadaThere’s no doubt that central banks are making “slow progress” in the CBDC field.
A complement to existing systems rather than a revolution
Institutions are taking “small steps on a long road”, but not necessarily wrongly. In the expert’s view, there’s no need to hurry, given the complexity of these projects and the associated gains.
CBDCs should be seen as a complement to existing banking and payment systems. We see an evolution, not a revolution”, comments the RBC Wealth Management representative.
From the Federal Reservecentral bank’s digital currency is certainly not the only one. not a priority. Such a currency would also entail major risks, particularly for stability.
We think that having a single point of failure for dollar payments in a world that uses the greenback for all kinds of exchanges is, in a word, a very bad idea”, says Atul Bhatia.
A major cyber risk as an obstacle
The first danger would be that of cyberattack, from hackersbut also potentially ” terrorists or geopolitical rivals”. For the expert, “just a glance” at the history of digital security shows the risks linked to the centralization of data and wealth.
RBC believes that securing the IT systems needed for a successful CBDC retail or wholesale would represent a Herculean task for the Fed. The bank also sees digital currency as a privacy risk. What about the benefits?
Overall, we think it’s hard to make a strong theoretical case for adopting a CBDC infrastructure. The efficiency benefits are real and significant, but they simply cannot justify the creation of a single point of failure in the critical payment infrastructure,” RBC concludes.
The bank is therefore counting on the slow emergence of a digital dollar. And when it comes to financial innovation United States would show themselves to be, to say the least conservatives. An illustration? “They were one of the last countries to introduce smart credit cards.
The reluctance of the financial industry
But the United States remains the world’s largest user of paper cheques. This attachment would therefore be incompatible with the adoption of digital money wallets – at least on a cultural level.
On the other hand Fed has to contend with “strong reluctance on the part of current financial infrastructure players”, including the two largest U.S. credit card networks.
A CBDC could threaten their more than $50 billion in revenues. Mastercard and Visa are far from being inactive in this sector. The former, for example, has the CBDC Partner Program, in which ConsenSys, Fireblocks and Ripple, among others, participate.
For a variety of reasons, however, RBC believes that the adoption of digital currency will take place in the following ways incremental. And not just in the land of the greenback.
We believe the Fed and most other central banks will take a more measured approach, closely integrating technology to achieve efficiency, but operating in parallel with existing payment structures.”
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