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A fresh report from Deutsche Bank outlines how CBDC’s could “erode the dollar’s primacy in global financial markets”, while paying little tribute to the fact that bitcoin is eating away at fiat currencies in their entirety.

In Brief

  • Deutsche Bank explores how CBDC’s could be used for bi-lateral trade agreements.
  • Central Banks are in various stages of CBDC research and development.
  • The report is unironically titled: “Central bank digital currencies: Money reinvented”.
  • Once implemented, CBDC’s could fast-track bitcoin adoption.

A new report from Deutsche Bank says countries must for the disruption central bank digital currencies may cause, referring to the primacy of the US Dollar in global trade and as the world reserve currency.
At this point, CBDC’s (Central Bank Digital Currencies) are inevitable and most central banks of note have strongly suggested their imminent adoption in some form or another. To this effect, the Deutsche Bank report said that CBDC adoption could “erode the dollar’s primacy in the global financial market.” The report is unironically titled: “Central bank digital currencies: Money reinvented”.
It appears they didn’t get the 2009 bitcoin memo.
More specifically, countries and large trading blocks and jurisdictions like the European Union could form bilateral trade agreements while bypassing the US Dollar entirely. Today, Dollars are involved in nearly 90% of global transactions, according to the Bank of International Settlements; it’s the world’s primary reserve currency. When introduced, the report notes that “CBDC’s could disrupt both the banking sector and the practicalities of central bank policy.” 
According to the report, 80% of the world’s central banks are researching whether a CBDC could benefit their respective economies.

How is a CBDC different to bitcoin?

CBDCs differ from digital money or stores of value like bitcoin, as they are issued and governed by authorities while being pegged to fiat currencies. A CBDC would work by digitalizing the US dollar or Japanese yen, for example. For individuals, short of another private banking sector meltdown, there is little direct benefit of switching ownership of funds from private banks to central banks if the opportunity arises, though this might not be a choice in the coming years.

All Central Banks are doing it

Per the report, central banks are in various stages of research. The central Bank of England, for example, is still trying to find its footing towards developing a CBDC; and seems to take more pleasure in pointless attacks on bitcoin than seizing the opportunity to take more control over the British pound. China, on the other hand, appears to already be testing a digital e-renminbi. “Issuing one of the first CBDC would also be a step towards China’s target of becoming a world leader in science and innovation by 2050 and provide a reserve currency,” the report said. 
The report noted that “payments need to be secure and simple for individual adoption” and “universal access has to be guaranteed.”
However, Deutsche bank closed by pointing out that CBDC’s might take some time to become universally used, noting there has not been “any broad empirical real-time test of CBDC”. The report concludes that developments would have to be monitored closely to answer questions on how the technology would impact the world.
If one were to guess, then a CBDC could act as a bridge to fast-track bitcoin adoption. After all, increased money centralization and surveillance isn’t exactly a good selling point for individuals to opt into a system that perpetuates issues related to money and the state.

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