Bank profits at risk from potential CBDC transformation of global economy: Moody’s

Emerging central bank digital currency cross-border transaction technology could transform the global economy by providing faster, cheaper and safer services for many of its players. But banks may not fare as well in that new economy, Moody’s Investor Service said in a report dated March 21.

Many proposals for the domestic use of CBDCs foresee a crucial intermediating role for banks in their operations, but cross-border CBDC transactions would depend on entirely new infrastructure that reduced the role of banks more severely, Moody’s pointed out. Banks would see benefits from the new technology, too. Settlement risk could be reduced or eliminated:

“Banks would be able to make, clear, and settle cross-border payments at low cost and in seconds without needing to sign up to multiple payment systems or rely on correspondent banks in other countries.”

The same innovations would also “reduce banks’…

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