The race toward bitcoin and cryptocurrency-inspired digital currencies, kick-started by Facebook and China, is moving up a gear—and Wall Street’s biggest banks are beginning to feel nervous.
“Our job is not to protect bank business models,” Bank of England deputy governor Jon Cunliffe warned last week, arguing banks around the world will “have to adjust” to a future where central bank digital currencies (CBDC) may severely reduce the how much cash is stored in bank accounts.
While Facebook’s ambitious plans for its libra cryptocurrency were torpedoed by governments and regulators around the world, nervous that the social media giant’s influence could destabilize monetary policy, China’s digital yuan is already being rolled out—forcing the U.S. Federal Reserve to seriously consider creating a digital dollar and inducing consternation on Wall Street that banks might be facing an existential threat.
