According to a report by Australian investment bank Macquarie, government digital currencies could lose the race against cryptocurrencies if they become too entrenched in e-commerce.
This applies to all central banks, including the US Federal Reserve System (FRS) and the European Central Bank (ECB). Macquarie experts believe that government stablecoins are lagging far behind cryptocurrencies, which are rapidly entering the market.
So, in early November, the PayPal payment system added the ability to buy, sell and store cryptocurrencies for American citizens. According to a survey by investment bank Mizuho Securities, 17% of surveyed PayPal users have already tried buying and selling bitcoin through a dedicated app.
According to the report, private cryptocurrencies can be so deeply embedded in the payments industry that any person or company will habitually pay with them for goods and services. This will be facilitated by the reduction in the cost of fiat money. It is highly likely that this will happen if people start using cryptocurrencies everywhere before the central banks launch their own digital currencies.
Macquarie expects cryptocurrencies to grow in value over the next two years, in the absence of major regulatory changes. However, if central banks accelerate the development and issuance of their digital currencies, then they have a chance to oust conventional cryptoassets from the market, which will reduce the risk of illegal transactions. But at the same time, the demand for ordinary money may decrease.
The People’s Bank of China (PBOC) may officially launch the digital yuan in the near future, since the citizens of Shenzhen have repeatedly received this asset as a gift from the state. In addition, a hardware wallet for the digital yuan has begun testing in Shanghai.
Analysts believe that the Fed and the ECB are unlikely to present their developments until 2022. They are experiencing difficulties not only in creating a secure infrastructure for launching digital currencies and their further use – regulators still cannot decide whether to launch government stablecoins, still assessing their risks and benefits.
Macquarie experts concluded that the power of US regulators over the cryptocurrency industry will gradually weaken. This is due to the fact that the cryptocurrency industry is “growing” more and more, creating a network effect. The demand for paper money is declining, and society is becoming more open to cryptocurrencies. And if the Central Bank does not rush to issue their own digital currencies, they will no longer catch up with conventional crypto assets.