BIS report says that the metaverse could place new demands on payment services moving forward
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In a recent report, the Bank of International Settlements (BIS) warned that the metaverse could place new demands on payment services. It also pointed out that these demands may be better met by central bank digital currencies (CBDCs)and retail faster payment systems than traditional cryptocurrencies.
What is the potential economic impact of services in the #Metaverse? Widespread adoption of tech like #VR and #AR could mean a blurring of lines between tradables and non-tradables, greater cross-border integration and new demands on payment services https://t.co/xoSv1tF9gx pic.twitter.com/TGiuXVlpN0
— Bank for International Settlements (@BIS_org) February 7, 2024
Metaverse could significantly impact the digital economy sector
The metaverse economy is seeing a rapid rise and is still far from hitting its peak. According to a Citi report from 2022, the Metaverse economy has the potential to reach the value of $13 million by 2030.
Since those early days, the buzz has somewhat subsided, but this technology continues to grow, even though it is at a slower pace. Despite this, BIS says that the metaverse could still succeed, and if it does, there will be significant implications for the digital economy sector.
One of them will be the new demand for payment services which are faster, programmable, and cross-border, according to the Bank.
Metaverse still has plenty of powerful promoters, one of the biggest ones being Meta, the parent company of Facebook. Meta, as well as others, have stressed the role of cryptos and stablecoins, both in and out of the metaverse. BIS’ recent paper, on the other hand, argues the importance of interoperability, competition, data privacy, and consumer protection.
It also argues that CBDCs and interlinked domestic fast payment systems could play a greater role in the future, simply because they are better options, and will likely be proven as such before long. Apart from that, the report also mentioned that there could be great potential in tokenized deposits, or digital representations of commercial bank deposits within programmable platforms.
BIS report predicts widespread adoption of the metaverse
BIS argued that a new public policy that would support efficient and interoperable payments, in addition to providing clear standards on data privacy, customer protection, and digital ownership is necessary. Without it, it would be difficult to prevent money and virtual environments from becoming fragmented and dominated by private companies.
The report added: “The volume of [metaverse] land sales has so far correlated with real estate prices in the real world,” adding also: “Yet it also correlates strongly with the price of Bitcoin, […] suggesting that speculation is a key motive.”
The authors concluded: “It is not a foregone conclusion that the metaverse will achieve widespread adoption.”
There is still a lot of work left to do in bettering the metaverse and preparing it for widespread adoption, as some uses continue to develop, and new ones are emerging all the time. However, the metaverse has already delved deep into multiple industries, including gaming, education, e-commerce, and healthcare.
BIS’ report added that even conservative estimates are putting the value of the metaverse market in the trillions of dollars by the end of the decade, which is why the financial industry needs to start preparing for this outcome.
