Our latest CIO Special looks at how central bank digital currencies (CBDC) and private-sector cryptocurrencies both appear poised for lift-off even though they are far from being two sides of the same coin.


“These two distinct but interlinked developments may now be approaching critical mass,” Christian Nolting, Global Chief Investment Officer, writes in “A tale of two siblings: cryptocurrencies and CBDC”. Nonetheless, the two separate approaches to digital currency face distinct issues and challenges, he says.


Cryptocurrencies “are here to stay” but should be considered in relation to factors including asset class comparisons, regulation, valuation, and the potential ESG impacts, Nolting writes. Assessing them is made more difficult by their volatility and the perception that they are simply speculative vehicles.


“Claims around cryptocurrencies’ characteristics as investment vehicles either in terms of portfolio diversification or inflation hedging need to be treated with caution,” he says.


As for CBDC, it is hard to assess their potential policy and social impact until one comes into full operation in a major economy, which may take several years.


“Widespread adoption may take time: major financial and social questions need careful consideration,” Nolting says. He adds that CBDC need to be evaluated not only in their own right, but also in terms of how they could “complement, or displace, increasingly widely used private-sector cryptocurrencies”.


Ultimately governments and more digitally aware populations may prefer to use CBDC at the possible expense of some cryptocurrencies, Nolting concludes. In that event, “the more successful cryptocurrencies are likely to become increasingly differentiated in terms of business models and utility”.



To download a PDF of the full report, please click here.

In Europe, Middle East and Africa as well as in Asia Pacific this material is considered marketing material, but this is not thecase in the U.S. No assurance can be given that any forecast or target can be achieved. Forecasts are based on assumptions, estimates, opinions and hypothetical models which may prove to be incorrect. Past performance is not indicative of future returns. Investments come with risk. The value of an investment can fall as well as riseand you might not get back the amount originally invested at any point in time. Your capital may be at risk.

The content and materials on this website may be considered Marketing Material. The market price of an investment can fall as well as rise and you might not get back the amount originally invested.  The products, services, information and/or materials contained within these web pages may not be available for residents of certain jurisdictions. Please consider the sales restrictions relating to the products or services in question for further information. Deutsche Bank does not give tax or legal advice; prospective investors should seek advice from their own tax advisers and/or lawyers before entering into any investment.