Fitch Ratings: Central Bank Digital Currencies Could Pose a Threat to Financial Systems

Reading Time: < 1 minute

Credit rating agency Fitch Ratings believes central bank digital currencies, or CBDCs, may pose a threat to financial systems, according to the latest report published by the agency.

Per the report, titled “Central Bank Digital Currencies: Opportunities, Risks and Disruption,” CBDCs can negatively affect traditional financial systems if the risks associated with them are not managed.

The firm claims these types of assets offer some great benefits, including their ability to expand government-backed cashless payments. The use of digital currencies can help reach previously unbanked users, as well as reduce the cost and speed of payments.

It is also believed CBDCs can help authorities to better track financial transactions, thus avoiding cash, the tracking of which is really complicated.

However, Fitch Ratings has also pointed out the use of central bank digital currencies may be hampered by the lack of privacy or storage limits of e-wallets.

Finally, the report refers to the fact that the widespread adoption of CBDCs can be dangerous for financial systems if the risks associated with them are not managed.