According to the report, risks to financial stability depend on the utilization or adoption rate of a CBDC, as well as the funding, lending and resilience of banks. Adopting too quickly could unbalance existing financial and banking systems, the report said. The prevailing fear is that using a CBDC would require a switch of funds from bank deposits to digital cash. Without bank deposits, banks will not have the means to provide loans that will help them make money: Should CBDCs replace bank deposits quickly, they could reduce banks’ lending capacity, which could lead to financial system instability.

LEAVE A REPLY

Please enter your comment!
Please enter your name here