Tobias Berg is a Professor of Banking in the Department of Finance at Goethe University Frankfurt. He has also been a Research Fellow at the Leibniz Institute for Financial Research (SAFE) since 2023. Prof. Berg is interested in how finance shapes firms, banks, and societies. He has served as an Associate Editor at the Review of Finance since 2023.
Abstract
We analyze the effect of a major central bank digital currency (CBDC) – the digital euro – on the payment industry to find remarkably heterogeneous effects. Stock prices of U.S. payment firms decrease, while those of European payment firms increase in response to positive announcements on the digital euro. Bank stocks do not react significantly. We estimate a loss in market capitalization of USD 127 billion for U.S. payment firms, vis-à-vis a gain of USD 23 billion for European payment firms. Our results emphasize the medium-of-exchange function of CBDCs and point to the important role of geopolitical considerations in designing financial architecture.
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