Central Bank Digital Currencies and banks: positive for some; a threat for others

Some market observers think CBDCs pose an existential threat to the banking industry by offering risk-free finance to businesses and households.

• But central banks are neither willing nor able to substitute for a credit-creating fractional banking system.
• CBDCs represent an opportunity more than a peril for banks that are at the digital forefront of the industry. 
• The threat is mainly for banks that are overly reliant on mass-retail activities, which fall behind with comprehensive digitalisation and have limited capacity to boost fee revenues.