Keywords: Central Bank Digital Currencies, Bank Failures, FDIC, JPMorgan Chase, Taxpayers, Too-Big-To-Fail Institutions


A new topic is capturing the financial world’s imagination – the potential rise of Central Bank Digital Currencies (CBDCs). While some see them as a revolutionary financial tool, others, particularly in the banking industry, view them with trepidation. This anxiety, at least in part, stems from previous banking crises and how those crises were handled, which have long-lasting implications for the world’s financial landscape.

A Look Back: The Case of First Republic Bank

One historical event comes to mind when reflecting on the dynamics between banks, regulators, and the taxpayer. The failure of First Republic Bank and the subsequent Federal Deposit Insurance Corporation (FDIC) orchestrated sale of its assets to JPMorgan Chase paints an intriguing picture.

In this case, a key FDIC rule was sidestepped – the rule that prohibits a bank owning over 10% of insured US deposits from further expansion via the absorption of another US bank. The main reason? The need to save taxpayers from the cost of another bank bailout. This allowed JPMorgan Chase, already a titan in the industry, to grow even larger, thus amplifying the Too-Big-To-Fail (TBTF) problem.

An Unconventional Hero: The Role of Private Sector

The intervention by JPMorgan was largely hailed as a “private sector” solution, lauded by both Democrats and Republicans. The reality, however, was that Jamie Dimon, JPMorgan Chase’s CEO, managed to secure a $50 billion credit line and a loss-sharing agreement with the FDIC. This deal eventually left American taxpayers with a $13 billion bill, demonstrating the weighty costs that such financial maneuvering can impose on the public.

Implications for Central Bank Digital Currencies

The evolution of financial crises and the strategies implemented to mitigate them provide essential context as we examine the emergence of Central Bank Digital Currencies. As CBDCs gain traction, they challenge traditional banking structures and norms, possibly triggering a new era of digital finance. It’s essential to learn from past financial experiences to ensure that CBDCs, if widely adopted, bring about more benefits than burdens.


As the potential for Central Bank Digital Currencies comes into focus, it’s crucial to navigate this financial innovation with the lessons from past crises in mind. CBDCs hold considerable promise, but their implementation should ensure the protection of taxpayers and the stability of the financial ecosystem.

Do you have thoughts or questions about CBDCs and their potential impact on the banking industry? I invite you to share your perspectives or pose your questions in the comments below. By fostering open dialogue, we can better understand these complex financial dynamics and contribute to more robust, inclusive, and balanced financial systems.

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