CBDCs and stablecoins: EY advises banks to ‘prepare for what's coming’
Big Four accounting firm EY has recommended that banks should change their regulatory perimeter to address the oncoming launches of state-backed central bank digital currencies (CBDC) and private stablecoins.
EY’s 2022 Global regulatory outlook highlighted the need for a policy change that can help financial services firms overcome business uncertainties amid mainstreaming of digital assets and cryptocurrency. While acknowledging the uncertainty regarding the digital assets market, the report stated:
EY recommended banking firms collaborate with regional and national regulators to foresee possible crypto adoption and proactively assess its impact on their business. The report also identified digitalization — alternative data sources and digital assets — as a potential factor to impact the regulatory environment:
Highlighting the potential of CBDCs to complement or replace fiat currency, EY warns banks to think about the implications for their balance sheets amid the possible interaction between CBDCs and stablecoins. Conceding the difficulty in gaining regulatory clarity, EY concluded:
Related: Central bank of Bahrain trials JPMorgan’s blockchain and token
Just last week, the Central Bank of Bahrain (CBB) collaborated with American investment bank JPMorgan to pilot the country’s CBDC test.
As Cointelegraph reported, the CBB completed a digital payments test using JPMorgan’s blockchain and cryptocurrency unit Onyx. Citing the development, CBB Governor Rasheed Al Maraj said that the trial has been crucial for the Bahrainian government to address and potentially eliminate existing inefficiencies in the traditional cross-border payments industry.
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