CBDC & Existing Commercial Banking Systems - JPMorgan Analysis Report.
2021-08-06 | Eddy Morgan
CBDC [Central Bank Digital Currencies] must not cannibalize countries’ commercial financial systems, JPMorgan outlined.
This risk lies in banking users moving funds from checking accounts to a CBDC account, which
could lead to the exodus of
the max amount as 30%
of commercial banks' funding base, JPMorgan strategist Josh Younger outlined within an official note
cited by Bloomberg earlier today on Friday.
"Relatively heavy-handed caps on holdings would be needed
to scale back the utility of a retail CBDC as a store
usefulness," Younger added
within the note.
Younger proposed a limit of $2,500 USD.
That would meet
the requirements of lower-income households without having
a major effect on commercial banks' funding mix,
as long as most such households have less than $1k in their checking accounts.
"If all one among those depositors were to carry only retail CBDC, it might not have a material impact on bank funding," he added.
A hypothetical conflict between central banks and commercial banks for consumer deposits
is usually raised as a risk
within the development of CBDCs. Were users
to put all their funds in an account with the central bank then
it might hinder commercial banks' ability
to offer loans and mortgages, with a
consequence on
the wide economy.
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