Martin Wolf in his column in FT “Now is the time to adopt as CBDC ” In which he goes over almost every issue in the current debate, he says that the big question is what the introduction of digital public money can mean for private banks.
There it says that the protections and guarantees to private banks could end and the financial system would be reconfigured without these protections.
Today the proposals that are being studied do not contemplate the suppression of privileges at the time of their introduction and there are even thinking of introducing limits to the use of CBDCs, which means that the direct impact on banks should be very limited.
This is a prudent position that allows digital public money to be available as soon as possible in such a way that all the innovations in the payment systems that the new private providers will introduce with the new technologies are made on the basis of safe and public money and don't add to the instability we already have with fractional banking.
However, the scenario that Martin Wolf points to will end up emerging at some point. Protections for private banks will be eliminated and formulas will have to be found so that the transformation - or disappearance - of the old players is done with the least possible trauma.