THE RISE OF CENTRAL BANK DIGITAL CURRENCIES: IMPLICATIONS FOR COMMERCIAL BANKING

Abstract

The emergence of Central Bank Digital Currencies (CBDCs) marks a significant shift in the global financial landscape, with far-reaching consequences for the traditional banking sector. As digital forms of sovereign currency gain traction, central banks aim to enhance payment efficiency, financial inclusion, and monetary policy effectiveness. However, the implementation of CBDCs poses potential challenges to commercial banks, particularly concerning their role in credit intermediation, deposit mobilization, and liquidity management. This paper explores the strategic motivations behind the development of CBDCs, evaluates their design frameworks, and assesses the potential impact on commercial banking structures and operations. It also considers the regulatory and technological adaptations required to ensure financial stability during this transition. The study concludes by outlining possible future scenarios and strategic responses for commercial banks in a CBDC-enabled economy.