Study: Corporate digital currencies could be a viable alternative for large corporations
Under certain conditions, corporations' use of their own digital currency instead of fiat may be a viable solution. This finding comes from a Richmond Fed article. According to the authors, developing and launching the corresponding platform would require significant costs, including cybersecurity measures. In a low and stable inflation environment, corporations are better off using existing payment systems. The situation changes when these costs can be minimized, there is a broad customer base, and inflation rises, forcing consumers to shed fiat. Analysts estimate that for Amazon, issuing and using only its own digital currency would become economically viable if interest rates rise above 11% per year. The figure could be lower if the retailer increases its market share, presently estimated at 6%. Such high figures include substantial costs associated with regulatory compliance. Corporations' interest in issuing their own digital currencies lies in earning seigniorage, a feature of central banks. Among other reasons are increased customer loyalty, data collection, and reduced settlement risks.