Bank of America: "The distribution of money in the form of government cryptocurrencies can increase inflation" – Bits Media

According to the report of Bank of America, State cryptocurrencies can potentially contribute to a powerful, targeted "distribution of money" and increase inflation expectations.

In the Bank of America report called "Digital Love: Digital currencies of central banks ", The advantages of state cryptocurrencies are explained, including the possibility of increasing the speed of domestic and international payments while reducing the costs.

"State cryptocurrencies can accelerate the distribution of monetary and fiscal incentives in the future", - Write the analysts of the bank.

The report notes, that the launch of state cryptocurrencies can indirectly create an additional demand for crypto assets as a hedging tool for inflation.

“State cryptocurrencies are the following line for the distribution of stimuli of the Central Bank, potentially acting as a powerful channel for an emergency lending program, universal basic income, and provoking the directed "reduction of the money supply". Evolution of digital currencies of central banks, probably, will increase inflation expectations, What will strengthen the arguments in favor of inflation assets in the 2020s ".

Analysts also noted, that the development of cryptocurrencies pushes central banks to protect their role in resolving calculations, as well as the ability to control banks and pursue a monetary policy. According to the report, State cryptocurrencies can provide low -income sectors of the population with wider access to financial services without banking mediation.

“The release of state cryptocurrencies, probably, would allow to simplify the structure and facilitate the target expansion of lending services ", - Analysts noted.

However, the report also lists the potential shortcomings of state cryptocurrencies. Governments can access data on the expenses of private individuals and provoke the "displacement effect":

“State cryptocurrencies can compete with banks and monetary funds, providing another option for maintaining the cost, Reducing cheap financing of deposits for banks and reducing the margin of money funds ".

Bank of America analysts expect, that the development of state cryptocurrencies will lead to an increase in inflation expectations, that will strengthen the arguments in favor of investment in inflation assets over the next few years.

Recall, that recently researchers of the Bank of International Settlements said, that compatible state cryptocurrencies will open for countries the possibility of improving the system of cross -border payments.