CBDCs Impact on Banks
Explore how Central Bank Digital Currencies threaten the $150 trillion banking industry and which survival strategies will determine winners from casualties
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If citizens can hold money directly at the central bank, why do we need commercial banks? This isn't hypothetical—CBDCs make it technologically possible. The $150 trillion global banking industry faces its biggest threat in 700 years.
Banks earn profits by borrowing short (your deposits) and lending long (mortgages, business loans). CBDCs could eliminate step one. No deposits = no cheap funding = no profitable lending = no banks.
The Historical Privilege
Since the 1600s, banks have enjoyed a unique privilege: the only private entities allowed to hold central bank money. Your bank account isn't real money—it's an IOU from the bank. Only banks have accounts at the Federal Reserve.
⚠️The Core Dilemma
Central banks face a paradox: CBDCs improve payments but could destroy banks. If everyone moves deposits to CBDCs, banks lose funding for $120 trillion in loans. The entire credit system collapses. Design choices matter enormously.
Why This Matters Now
Over 130 countries (representing 98% of global GDP) are exploring CBDCs. China's e-CNY has 260 million wallets. The Bahamas, Nigeria, and Jamaica already launched. The question isn't "if" but "when" and "how badly will banks be hurt?"