High dollarization poses rising risks for banks in emerging markets; US eyes central bank digital currency

Lev Dorf of the Banking team looks at why high use of dollars in many emerging markets poses rising risks for the country’s banks and where those risks are highest. Plus, Stephen Tu of the Financial Institutions group analyzes the Federal Reserve’s recent report and request for comment on the potential benefits of a US central bank digital currency.Related content on Moodys.com (some content only available to registered users or subscribers): Financial Institutions – North America: Fed’s US CBDC report highlights both the potential efficiencies of digital money and funding risks for banksBanks – China : Design of e-CNY will minimize risk of bank disintermediation in its initial phaseBanking – Global: Central banks aim to limit disruption when designing retail digital currenciesFinancial Institutions – Global: Four forces reshaping financial landscape have potential to dislodge incumbentsBanks - Emerging markets: High dollarization poses long-term risks for banks and for wider financial stability