Analysts from CoinShares believe that central bank digital currencies (CBDCs) are not a competitor to crypto and rather a complementary currency offering.
The vast majority, around 90%, of central banks have begun working on their own digital currencies. Reports suggest that some of those banks could release a viable product within the next few years according to a survey from the Bank for International Settlements (BIS).
Central banks are exploring the world of CBDCs and exploring whether they can help achieve public objectives. Such goals include safeguarding public trust in the currency, a stable price, and creating a safe payment system and infrastructure. If the banks are successful and economies move to the digital realm, the public would retain access to the safest form of money, according to some.
Expect an expansion of payment diversity, faster and cheaper cross-border payments, and even quicker fiscal transfers in emergencies.
In an interview with Reuters, Meltem Demiorors, chief strategy officer at CoinShares, was quoted as saying that CBDCs “is structurally no different than fiat, and they are very much complementary to crypto, not competitive.”
Kevin Kelly, head of global macro strategy at Delphi Digital had similar hopes for the coexistence of CBDCs and cryptocurrencies. Kelly stated that he expects CBDCs to improve upon the existing monetary system with a smoother transmission of fiscal policy.
He added that this will also likely aid crypto markets by bridging the gap between fiat and DeFi.
Some analysts disagree
While most analysts agree that CBDCs will benefit both fiat and DeFi, some are not as optimistic. Todd Cipperman, the managing principal at Cipperman Compliance Services believes that some nations would put cryptos on the back burner and promote their own currencies first.
“Could the United States government create its own U.S. digital currency and say we believe in crypto, but only this crypto? Sure, I think that could absolutely happen,” said Cipperman.
It is easy to see how some governments would make this move. Nigeria, for example, has gone from outright banning commercial banks from working with crypto exchanges to announcing their own digital currency is in the works.
The interviews conducted were part of a series on digital currencies hosted by the Reuters Global Markets Forum.