Central bank digital currencies may be disruptive for financial systems – Fitch
“Widespread adoption of CBDCs may be disruptive for financial systems if associated risks are not managed,” Fitch Ratings analysts have written in a note.
“These [risks] include the potential for funds to move quickly into CBDC accounts from bank deposits, causing financial disintermediation, and for heightened cybersecurity threats as more touchpoints are created between the central bank and the economy,” the analysts added.
Fitch pointed out that the key benefits of retail CBDCs lie in their potential to enhance authority-backed cashless payments and the opportunity to bring underbanked communities into the financial system.Also on rt.com ‘A necessary step’: Japan starts trials on issuance of national digital currency
As for the downsides of CBDCs, these include the potential that they may offer less privacy than cash, or that governments could severely limit the amounts held in electronic wallets, the ratings firm said. That could deter the public from using them, it noted.
Fitch’s warning comes as global central banks are forging ahead with initiatives for developing their own digital currencies. They're seeking to modernize financial systems and ward off the threat from cryptocurrencies, as well as to speed up domestic and international payments.Also on rt.com With central bank-issued digital currencies we are on the road to civilization collapse – RT’s Keiser Report
The Central Bank of Russia plans to launch its first digital ruble prototype this year. In China, massive pilot testing of the digital yuan is currently underway in major cities across the country, which plans to have its sovereign digital currency ready in time for the Beijing 2022 Winter Olympics.
The Bank of Japan said last month that it has begun experiments to study the feasibility of issuing its own digital currency. Meanwhile, the Central Bank of the Bahamas officially introduced the sand dollar last year, which is a digital version of the Bahamian dollar.
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