- The establishment of digital currencies by central banks would encourage wider demand for crypto assets, according to a study by the Economist Intelligence Unit.
- 59% of study respondents held that view of influence by central banks on digital assets.
- China is running a pilot digital program and the Fed has stepped up efforts around a digital dollar.
- See more stories on Insider’s business page.
Digital currencies established by central banks would stoke wider demand for crypto assets, according to an Economist Intelligence Unit study, which comes as central banks including the Federal Reserve have been stepping up work in this area.
59% of study respondents agreed that the launch of digital currencies by official monetary authorities would lift up use of other forms of digital currencies and assets that are not backed by governments. The EIU study, commissioned by crypto exchange platform Crypto.com, posed the question to 200 institutional investor and corporate treasury management officials between February and April.
A central bank digital currency, or CBDC, is a type of central bank liability – like the US dollar – issued in digital form.
Meanwhile, 78% of the institutional and corporate survey takers consider the issuance of CBDCs as necessary to establish a functioning market for new financial instruments, such as digital bonds, to supplement the role of cryptocurrencies.
“If people get used to central bank money that is digital-they have access to central bank money in a digital format-that obviously makes them more comfortable to use other digital currencies,” Henri Arslanian, the crypto leader at PwC, one of the world’s largest auditing and financial services firms, was quoted as saying in the EIU study.
Central banks are “late to the race” in digital adoption but they still carry influence in such matters, the study said.
On tap for central banks, Federal Reserve Chairman Jerome Powell recently said the Fed plans this summer to publish a paper on its thinking about digital payments as the bank advances its efforts in potentially creating a digital dollar. The Chinese government has launched a pilot program centered on a digital renminbi and the UK said it’s coordinating exploratory work on a CBDC dubbed “britcoin.
In Sweden, the central bank in April was moving toward testing with banks a so-called e-krona. The Bahamas became the first country to launch a digital version of its fiat currency with the October 2020 launch of the digital Sand Dollar.
The EIU study found that 74% of respondents believe their countries are or will become cashless.