The rise of Central Bank Digital Currencies (CBDCs) is “inevitable” and could completely replace cash in the distant future, according to analysts at Bank of America (NYSE:BAC).
In a research paper published on Wednesday and reported by CoinDesk, the US banking giant said CBDCs were a “much more effective payment system than cash” and that the decline in notes and coins is likely to continue given the declining role of cash in daily transactions, increasing use of blockchain technology by private companies and the potential of CBDCs to provide a boost to national economies.
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Bank of America also said that CBDCs qualified as money due to their ability to act as a store of value as well as a unit of account and a means of exchange, features it said were not shared by most cryptocurrencies, which should instead be treated as an asset class.
The assessment comes amid growing interest of central bank’s and national government’s in CBDCs, with countries such as China and Nigeria expected to trial their own versions in the coming months.
Interest in CBDC has also reached the UK, with Chancellor of the Exchequer Rishi Sunak having placed CBDC on a list of planned financial reforms designed to boost the British economy following its pandemic slump.