Abstract We analyze risks to bank intermediation following the introduction of a central bank digital currency (CBDC) competing with commercial bank deposits as households' source of liquidity. We revisit the equivalence of payment systems result, introducing a collateral constraint on banks' borrowing from the central bank. Comparing equilibria with and without CBDC, we find that the central bank can ensure the same equilibrium allocation by offering loans to banks. However, to access loans, banks must hold collateral at the expense of extending credit to firms. While CBDC introduction has no real effects, it changes aggregate capital ownership and banks' business models.