Bank of America “The development of applications that leverage blockchain technology” will continue
After a number of major banks and the Federal Reserve Bank of New York began testing the use of digital tokens representing dollars, Bank of America (BofA) said in a research report Thursday that it is crucial to distinguish speculative cryptocurrency trading and token prices from the underlying blockchain technology.
According to BofA analysts Alkesh Shah and Andrew Moss, the creation of applications using distributed ledger and blockchain technology will advance despite the recent market chaos that followed the collapse of crypto exchange FTX.
New York Fed said participants included Citigroup (C), HSBC (HSBC), BNY Mellon (BK), Wells Fargo (WFC), and Mastercard (MA), the world’s largest payments company.
A wholesale CBDC may be issued before a retail CBDC, according to Bank of America, because it is less complicated in terms of design, privacy, and banking system ‘disintermediation.’ Depending on the CBDC implementation strategy chosen, there may or may not be beneficiaries.
Faster settlement times are one advantage of a wholesale central bank digital currency (CBDC), according to the bank, which may enable financial institutions to reallocate assets that would have otherwise been retained as collateral into yield-bearing investments. Additional benefits include decreased costs, decreased credit risk, and better transparency.
The statement stated that central banks and governments are anticipated to push digital asset innovation by using the private sector, which would lead to the creation of new revenue streams.
Payments and consulting companies may receive contracts from governments for their skills, but “infrastructure providers that offer distributed ledger platforms, cloud storage, cybersecurity, digital asset custody/wallets, and telecom for offline access” are likely to have a greater revenue opportunity.