The Impact of Central Bank Digital Currencies and Cryptos News on Global Banks’ Stock Returns

ABSTRACT

This paper examines the nature and extent of the impact that news related to cryptocurrencies and central bank digital currencies (CBDCs) has on the stock returns of a sample of major global banks and explores the implications for the broader economy and global financial stability. Our results suggest that shocks originating in the cryptocurrency markets have a negative but short‐lived effect on the performance of the banking sector, whereas the adoption of CBDCs has a positive impact on bank stock performance. These findings offer valuable insights for both policymakers and financial institutions, highlighting the importance of incorporating effective safeguards into the regulatory frameworks for crypto assets and CBDCs to mitigate potential risks to financial stability.