Central Bank Digital Currencies: What future for banks and other financial intermediaries?

Central banks’ issuance of digital currencies has far-reaching consequences, as digital currencies impact the entire financial system beyond the mere digitisation of cash, particularly concerning the stability and role of the so-called commercial banks and other traditional intermediaries. Nowadays, currency—in its various forms as cash, bank money, and reserves—is the core of a complex system of interactions that have been gradually formed over time between the different actors involved: central banks, commercial banks, other financial operators who are now allowed to provide payment services, and, finally, users. The introduction of a central bank digital currency, especially a retail one, intended to guarantee universal access for private individuals to the central bank accounts would, in theory, lead to the elimination of banking intermediaries—in their role as money issuers—as well as the payment institutions that have entered this sector in recent years. For this reason, most central bankers, at least those in Western countries, are treading this path with extreme caution at the urging of international authorities. This chapter aims to analyse this issue.