One of the objectives that central banks try to achieve is to ensure banks lend out money (within risk limits). Capitalist economies depend on it to thrive; not

One of the objectives that central banks try to achieve is to ensure banks lend out money (within risk limits). Capitalist economies depend on it to thrive; not in a Ponzi-like meaning, but rather to ensure money isn't hoarded, but rather is put to work (loaned money is used to drive business forward). When this drops and central banks want to increase lending, for example, they drop the interest rate banks earn from just holding assets with the CB, encouraging more commercial lending (at higher risk but also higher interest). Diverting all these deposits away from lending banks and into Fed account totally undermines it. Worse still, as other comments say this is more likely in a crisis, exacerbating it (eg maybe in plain sailing customers seek out banks with better savings rates but in a pinch will redeem ASAP). CBDC is a bit if a half baked idea AFAICT, but it would replace cash, not all banks. Someone would still need to lend the digital cash.