03.06.202114:05 Forex Analysis & Reviews: The era of digital currencies has arrived

ECB warns that countries who refuse to introduce digital versions of their national currencies may face serious problems in their financial systems and monetary autonomy.

This is because consumers and companies in these countries will have to depend on a small number of payment service providers, including foreign tech giants. Accordingly, this will affect the central bank's ability to fulfill its mandate and act as lender of last resort.

Aside from that, cryptocurrencies are gaining much attention, and even though governments are trying to take control of the industry, only a small part of it will be regulated. The easier option is to develop digital currencies and introduce them into the economy. Such will help to partially reduce the burden on the financial system, not to mention make it more flexible.

Hence, many countries, including the US, are taking such measures. In July this year, the Federal Reserve and the Massachusetts Institute of Technology are set to publish their research on this topic and the first results of their work.

Other countries have not seen major breakthroughs yet, but in 2020, Bahamas launched a digital currency called the "sand dollar", which is more of a money for a narrow circle of people. Brazil, which has been working on digitizing real (BRL) for a long time, plans to launch it in 2022. Canada is also working on digitizing loonie, but there are no plans to launch it yet. As for China, a pilot digital yuan will be launched in 2022.

Japan is still considering the idea of digital currencies, just like the Euro area. But ECB President Christine Lagarde said in an interview that a digital euro could emerge within the next four years if officials approve the project. The ECB believes it could help increase the international reach of euro, especially if it is designed with an emphasis on security, low transaction costs and interoperability with other services. But Lagarde emphasized that such is not the main motivation for the release of a digital asset.

Going back to cryptocurrencies, a lot depends on the range $ 31,000 - $ 41,000 because as long as Bitcoin remains there, the market will remain bullish. And if the quote goes above $4 1,100, BTC will have a chance to hit $ 46,700 and $ 52,000. But if the quote drops below $ 30,900, Bitcoin will collapse to $ 25,000 and $ 21,700.