The motivation for this piece is the 2021 Annual Reserve Management Survey by UBS – view the full report HERE.
Combining the results of that survey with some of our own analysis we conclude that:
- When it comes to the role of crypto in reserve operations, central bankers are as yet undecided.
- We see a clear trend over the past two or so decades of central banks including more and riskier assets in their toolbox.
- We think that existing crypto such as Bitcoin has a role to play in reserve management operations and that central banks could use it to their benefit in the current environment.
- We think that the introduction of Central Bank Digital Currencies (CBDCs) and the possible risk of disintermediation of the banking system could benefit, rather than endanger, financial stability.
- We believe that the introduction of CBDCs will not “antagonize” or be a threat to existing crypto. A more likely scenario is for CBDCs to complement other cryptocurrencies.
Read our full insight piece in the PDF below.