The Bank of America does not think the Bank of England’s digital currency (CBDC) can only function as a form of digital currency, the Bank of England has said. The US financial institution says current accounts are more likely to be converted into “state cryptocurrencies” and that consumers will begin to save money.
The UK bank calls the potential CBDC “Britcoin” – essentially an alternative to cash. “Such construction is possible [no entanto] That would be 15 times more and could convert £ 440bn ($ 598bn) into current accounts and not £ 30bn in cash, “he wrote in a survey entitled” Digital Money in the UK “.
The Bank of England has not yet decided whether to create a digital libra. His most recent move was to establish two forums in September last year to discuss key issues surrounding the CBDC. The company said it could only introduce the digital currency in the second half of this decade.
Bank of America has said that it will be more convenient to change the verification account for Britcoins as the consumer has only a small amount of money. This can be a worrying area for commercial banks. Current accounts are the lifeblood of their business models, and they provide consistent, long-term financing.
The Bank of America’s assumption that the Bank of England’s assumption that users will only be a substitute for the digital pound with their cash reserves is a risk to banks, “said Bank of America, citing concerns raised recently by the House of Lords’ Affairs Committee. A potential UK CBDC.
The panel explained that it was inevitable for consumers to transfer money from their bank accounts to CBDC wallets.
“Resold” money
The Bank of America decides that Britcoin will represent the “rally” of money. If the consumer has a substantial amount in the Britcoin wallet, banks cannot trust the stability or maturity of the current account deposit. Products such as credit cards and mortgages cannot be sold as effectively as they are now.
In extreme cases, the Bank of America says, this could lead to a restructuring of the institutional structure of the financial markets. The report explains that it is safer to have money in the bank than to have it in “non-bank” like “checkout.com” or “Wise” payment providers because the bank’s customers have access to the settlement plan. Services, legal insurance that guarantees a deposit of up to 85,000, is one that other financial institutions do not have.
However, if a non-bank provider offers a wallet that can store Britcoin, it will be at least as secure an option as a verification account. Maybe even more so, Britcoin’s central bank will be cash.
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“The Bank of England, in its analysis, is a quick reference to the potential movement of transactional relationships outside banks,” Bank of America said. “We assume that if these are available to a third party provider, high value savings balances linked to current accounts will automatically become less stable for the bank.”
Commercial banks run the risk of losing their customers’ finances and relationships with them.
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