Deutsche Bank Expects Digital Currencies to Go Mainstream In Next Two Years

The onset of digital currencies is likely to change the face of the global payments industry in the next few years. On Monday, January 27, Deutsche Bank published a report stating that the global economy will see a widespread adoption of digital currencies in the next two years.

The report mentions that digital currencies have the "potential to radically change payments, banking, central banking and the balance of economic power. We believe a new digital currency could become mainstream within the next two years”.

Additionally, Deutsche Bank predicts that Facebook’s Libra cryptocurrency and China’s native digital currency, the Digital Yuan will go live this year. With these two projects hitting the industry, digital currencies are most likely to be available for more than half of the world population.

Analyzing the current adoption of digital currencies, the report states cryptocurrencies are running in parallel to the internet during its early years. Currently in 2020, there are 50 million blockchain wallet users in the market. Deutsche Bank predicts this figure to go up to 200 million active blockchain users by 2030.

The future of the global payments industry looks promising as it is shifting more towards the use of digital currencies. But Deutsche Bank report also mentions that public cryptocurrencies like Bitcoin are too volatile in nature and hence serve better as a store of value instead being used for daily purchases.

On the other hand, the report also speaks about the use of cash and its inherit benefits. Deutsche Bank says that despite the digital payments revolution, cash will continue to have its importance in the market.

Deutsche Bank is also very optimistic on the use of CBDCs and says that they can bring new solutions to the existing challenges in the global economy. The report states that if CBDCs are fully-accepted and that central banks bring interest bearing accounts available to every citizen, CBDCs could "resolve many problems caused by the current fractional reserve banking system”.

The Deutsche Bank report comes just after the Bank of International Settlements (BIS) announced its collaboration with six global central banks on researching and developing central bank digital currencies (CBDCs).

Also, the Bank of Japan has announced that it will soon start working on its own CBDC - the Digital Yen - amidst the rising competition posed by Facebook’s Libra and China’s Digital Yuan.