In brief

  • Central bank digital currencies (CBDCs) will be transformative and countries should be prepared, Deutsche Bank said in a report.
  • The currencies could also “erode the dollar’s primacy in the global financial market.”
  • Most countries are exploring CBDCs, with China one of the most active.

Central bank digital currencies (CBDCs) are likely to transform the way we live, and consumers and financial institutions need to be ready, Deutsche Bank has said. 

CBDCs could have a particularly heavy effect upon the US. That’s because CBDCs adopted around the world could “erode the dollar’s primacy in the global financial market,” the bank wrote in a September report, “Central bank digital currencies: Money reinvented.” 

Specifically, countries could use their own digital currencies to engage in bilateral trade while bypassing the US dollar. Dollars are involved in nearly 90% of global transactions, according to the Bank of International Settlements; it’s the world’s primary reserve currency.


So, although such technology could be beneficial—such as through lower interest rates—it could “be disruptive both for the banking sector and the practicalities of central bank policy.” 

According to the report, 80% of the world’s central banks are researching whether a CBDC could benefit their respective economies. CBDCs differ from other digital currencies, like Bitcoin, as they are issued and regulated by governments and are pegged to fiat currencies. A CBDC would work by digitalizing the US dollar or Japanese yen, for example. 

Central banks in different countries are in very different stages of research. For example, while the Bank of England is still cautiously taking baby steps toward developing a CBDC, China appears to already be testing a digital e-renminbi. “Issuing one of the first CBDC would also be a step towards China’s target of becoming a world leader in science and innovation by 2050 and provide a reserve currency,” the report said. 

And for individual users, CBDCs could help make transactions cheaper and more decentralized—though the report said that “payments need to be secure and simple for individual adoption” and “universal access has to be guaranteed.”

But the report noted that there has not been “any broad empirical real-time test of CBDC” and developments would be monitored closely by the bank to answer future questions on how the tech would impact the world.


Daily Debrief Newsletter

Start every day with the top news stories right now, plus original features, a podcast, videos and more.