Deutsche Bank Says Central Bank Digital Currencies (CBDCs) May Change All Financial Relationships

A report has been issued by Deutsche Bank (DB) related to Central Bank Digital Currencies (CBDCs) where it has talked about the effects of the implementation of centralized digital currencies on governments and central banks. Deutsche Bank has said that a Central Bank Digital Currency may change all financial relationships once it is implemented.

Published under the title “CIO Special Central bank digital currencies – Money reinvented”, the report of Deutsche Bank highlighted the advantages and disadvantages of Central Bank Digital Currencies while focusing on its effects on governments and individuals. The bank said that CBDC will offer various challenges to financial institutions as well as central banks. The report stated that there is likely a chance that they significantly change the financial world of ours while disrupting the banking sector.

While outlining the advantages of CBDCs, the bank said that it can increase the speed of monetary transactions and can make them easy for individuals as well as for governments. “And there would be more subtle benefits too: for example, from an investor’s perspective, some existing risks from bad corporate governance could be reduced by the better transparency and traceability of CBDC transactions,” the bank added.

However, on the other hand, Deutsche Bank said that there are multiple challenges that CBDCs pose and they cannot be neglected. Its implications and effects will obviously be on various entities especially on the commercial banking system and individuals. It added that there are some issues related to centralized digital currencies including regulation, scalability, and privacy which need to be addressed.

Explaining its point of view further, the bank asserted that governments will be required to redefine the role of banks once Central Bank Digital Currencies are implemented as in the presence of CBDCs, individuals won’t have to rely on any third party and they can handle their digital bank accounts on their own.

There are several central banks from across the whole world that are working on issuing their own central bank digital currencies. The People’s Bank of China (the country’s central bank) and Sweden’s central bank are currently leading in the progress of CBDC as they have entered into the testing phase of their digital currencies. The bank also said that we should prepare ourselves for using CBDC and we should know how to make use of them the best once they are included in our lives.

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