JPMorgan Says Digital Currencies Must Balance Inclusion, Banks

The creation of central bank digital currencies to address economic inequality with new retail loan and payments channels must be designed so they don’t “cannibalize” a country’s commercial financial system, according to JPMorgan Chase & Co.

If set up hastily, retail CBDCs could risk “disintermediating commercial banks” and lead to the exodus of 20% to 30% of their funding base -- “potentially rapidly under stress,” JPMorgan strategist Josh Younger wrote in a note Thursday.

It’s possible to have more “financial inclusion” without significantly affecting the structure of the monetary system, he said. That’s because most lower-income households have less than ...