Deutsche Bank: Digital currencies are difficult to replace gold, which has "apolitical" characteristics

Thu Lan Nguyen, head of FX and commodities research at Commerzbank, points out that the World Gold Council has put forward a new idea to modernise the gold market, with plans to introduce a form of digital gold. The motivation behind this may be the fear that stablecoins and/or central bank digital currencies could become alternative investments for gold. But in our opinion, this fear is unfounded. Both stablecoins and central bank digital currencies are pegged to fiat currencies - stablecoins are backed by US dollars, while central bank digital currencies are issued directly by central banks, which in fact function like cash. Gold, on the other hand, is'apolitical ', meaning it is not issued by any central bank or other political institution. The total amount of gold is mainly determined by the supply of minerals, which changes more slowly. For investors who invest in gold as a hedge against political risk, whether fiat money can be transferred more easily and cheaply may not be a priority for them.