I have been asking myself how will these coexist? Will these all trade in tandem without us noticing anything has changed? Obviously the world of fiat is developing and has progressed to the point where these new technologies are forcing traditional banking and finance to adopt them. But, will we notice? I do not think so, I think CBDCs will trade exactly the same, continuing to be a representation of all the variables that have made up previous FX pair price movements. If a new variable materializes, how will it show itself? One thing will be instant settlement. Will instant settlement lessen the volatility, because it will shorten the risk window? Or will it increase tick data because currency exchange will happen when immediately needed more often then bigger block trades less often? I most certainly do not have these answers, but welcome any insight or views you may have.
The Fed is years away from determining if digital currencies will be viable in the real world. FEDNOW (being rolled out in the coming months) is the first step to instant settlement across various platforms using fiat currency.