Deutsche Bank says crypto poses threat to financial stability

Research from Deutsche Bank claims that non-sovereign cryptocurrencies "pose a threat to political and financial stability" as a "real digital payment revolution" has been underway for the past decade.
The bank has called the impact of cryptocurrencies and blockchain on macro and geopolitical spheres "profound" and warned of threats to international monetary stability. The report looks at the increasing role of digital payments infrastructure in the world economy and identifies several areas of concern for fiscal policy makers.
The report says that digital currencies like bitcoin are too volatile to be a reliable store of value. The bank also suggested that a new digital currency could emerge and gain mainstream adoption. The report reads, "looking ahead, it may not be surprising if a new and mainstream cryptocurrency were to emerge unexpectedly."
If companies doing business in China are forced to adopt a digital yuan, it will certainly erode the dollar’s primacy in the global financial market"
Bitcoin itself, for example, went from $1,000 in early 2017 to a near $20,000 all-time high by December 2017, only to then drop to a $3,200 low seen in December 2018.
The German bank claimed that cryptocurrency is not going to replace cash anytime soon. However, it did warn that cash is losing ground as a payment method, as some countries replace traditional payment methods with digital solutions.
Deutsche also highlighted the role of central bank digital currencies (CBDCs), especially those being developed in emerging economies such as India and China, as a danger to the current economic status quo.
"China is working on a digital currency backed by its central bank that could be used as a soft- or hard-power tool. In fact, if companies doing business in China are forced to adopt a digital yuan, it will certainly erode the dollar's primacy in the global financial market."
China's president called for the country to accelerate its blockchain adoption in late 2019, while India's securities regulator recently called for exploration of the best possible usage of blockchain in securities markets.
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