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Please use the sharing tools found via the share button at the top or side of articles. Copying articles to share with others is a breach of FT.com T&Cs and Copyright Policy. Email licensing@ft.com to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be found at https://www.ft.com/tour. https://www.ft.com/content/b4fa13c7-7b4b-469b-8401-638c85e79289 The boundaries between cryptocurrencies and traditional asset classes are blurring ever further, as established Wall Street players make trading digital assets part of their main business — and companies native to bitcoin push into mainstream markets. The arrival of institutional investors into the $1.3tn digital asset market has meant the influence of big banks and professional traders has grown. As a result, the relationship between the price of mainstream assets, such as stocks and bonds, and crypto has tightened. But, so far, the majority of the...

6. Practical Implications for Banks 6.1. Flight to Safety/Bank Runs The main concern for commercial banks when it comes to the implementation of retail CBDCs and especially direct CBDCs is the resulting risk of a consumer flight to safety and the consequent risk of bank runs that this creates. At present, bank runs are theo-retically possible but are harder to execute due to physical limitations. During contem-porary bank runs, consumers have to physically go to a local bank branch and line up to get their money. However, the execution of these withdrawals when using retail CBDCs is far easier, where a bank run would then be possible simply with frictionless digital transactions on a computer or smartphone. From this, there is clearly the possibility that retail CBDCs may make bank runs very easy and thus, more probable. This risk may henceforth pose a great risk to financial stability during times of heightened demand for bank deposit withdrawals. In support of this sentiment, Willi...

The interviewee, who explicitly wished to remain anonymous, is an economic advisor at a major Swiss financial institution. In the past, he has written extensively about the sys-temic risks inherent to quantitative easing, especially those around asset price inflation and the mortgage market. These include inflationary pressures from the flattening of the yield curve and a lower rate environment, as well as the effect that this can have on the velocity of money. Most recently, he has authored around the central bank risk transfer that CBDCs can create. As part of this current research, the interviewee has assessed and made sugges-tions around how the issuance of a retail CBDC could lead to an expansion of the central bank balance sheet. An expansion of this kind would be driven by greater demand for consumer and retail access to low risk deposits, which in turn could create substantial changes to the risk profile of the central bank portfolio (Anonymous, personal commu-nication, 11 Mar...

The Covid 19 global pandemic has fundamentally reshaped the patterns of consumer purchase behaviour and retail payments infrastructure as we previously knew them. This core shift has also accelerated other payment trends that were underway before the pandemic started, such as contactless payments (Shin, 2020) and the decline of cash usage (Kiff, et al., 2020). While such trends towards digitisation no doubt already exist-ed in part, the possible spread of a deadly virus via cash usage, as well as the increased proportion of remote payments, accelerated the diffusion of mobile and digital payment methods substantially. This preference became prevalent to such a degree that the use of cash was actively discouraged by retailers to avoid contact with customers as much as possible, as well as to reduce the amount of purchasing that was conducted in-person. Furthermore, demographic changes in the world population have seen young adults such as millennials and Generation Z showing a strong p...