Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
JP Morgan warns CBDC could mean banks lose 20-30% of funding
Ledger Insights | Aug 6, 2021
JP Morgan strategist Josh Younger has penned a piece warning that central bank digital currencies (CBDC) need to be designed to avoid disintermediating commercial banks, Bloomberg reports. The topic is one of the key challenges in a retail CBDC design and is widely recognized as a risk.
YoYounger put a figure on the risk saying it could lead to the loss of 20%-30% of the funding base of commercial banks. And that shift could be rapid in a crisis, another issue that central banks acknowledge.
Podcast: Requirements for a fully functional CBDC
Much depends on whether the CBDC holdings will be limited. For example, if a key purpose of the CBDC is financial inclusion and the target is mainly low-income households who typically have less than $1,000 in their accounts, the impact would not be material.
“Hard caps of $2,500 would likely meet the needs of the vast majority of lower income households while not having any discernable effect on the funding mix of large commercial banks,” wrote Younger.
Younger was focused on a U.S. digital dollar. Over in Europe, the European Central Bank floated the idea of a €3,000 cap to dissuade citizens from using a digital euro as a store of value. Earlier this year Morgan Stanley estimated this could attract €873 billion ($1 trillion), or 8% of European commercial bank deposits.
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