Valdai Club

We expect central bank digital currencies (CBDC) to gain further momentum. This will likely be driven first and foremost by China, which is advancing quickly with its digital yuan pilot projects, writes Dirk Willer, Global Head of Emerging Markets Strategy at Citi. However, the digital yuan can only be a competitive tool for China if authorities are willing to grant more anonymity than they may be inclined to offer. Furthermore, the rise of the digital yuan is likely to increase regulatory risk for all crypto currencies.

Uncertainty about the size of the shock stressing the global banking system is high. But most likely the shock is in line with scenarios used in regulators’ stress tests, at least on a two-year basis, and therefore the situation is likely manageable.