Central banks (CBs) have long issued paper currency. The development of Bitcoin and other private digital currencies has provided them with the technological means to issue their own digital currency. But should they?
Addressing this question is part of the Bank’s Research Agenda. In this post I sketch out how a CB digital currency – call it CBcoin – might affect the monetary and banking systems – setting aside other important and complex systemic implications that range from prudential regulation and financial stability to technology, operational and financial conduct
I argue that taken to its most extreme conclusion, CBcoin issuance could have far-reaching consequences for commercial and central banking – divorcing payments from private bank deposits and even putting an end to banks’ ability to create money. By redefining the architecture of payment systems, CBcoin could thus challenge fractional reserve banking and reshape the conduct of monetary policy.…Bank of England — Bank Underground
Central bank digital currency: the end of monetary policy as we know it?
Marilyne Tolle
By redefining the architecture of payment systems, CBcoin could thus challenge fractional reserve banking and reshape the conduct of monetary policy.
ReplyDeleteWhy is she being highlighted here for this troglodyte thinking?
Why is she being highlighted here for this troglodyte thinking?
ReplyDeleteBank of England
Fractional fiat banking? Where'd they find this person?
ReplyDeleteMarilyne Tolle is not the only one who thinks CBCoin could mean the end of fractional reserve. Positive Money is backing CBCoin because it wants to end fractional reserve and replace it with full reserve and PM thinks CBCoin would tend to have the effect that Tolle refers to.
ReplyDeleteI was at a meeting last night in the North East of England where we discussed this, and the consensus was that the CBCoin could indeed hasten the introduction of full reserve. One of the people there worked for One Coin which is a rival of Bitcoin’s.
Someone else who thinks likewise is an economics prof at Bern University, Dirk Neipelt. He isn't a big fan of full reserve, but on the other hand thinks it might work. This is a video of his on the subject – don’t be put off by the poor sound at the start. That only lasts a minute or so.
https://livestream.com/accounts/650767/events/5472148/videos/127258873/player?autoPlay=false&height=360&mute=false&width=640
Can someone explain the difference between "fractional fiat" and "full fiat" .... and why we'd want to keep any fiat in reserve?
ReplyDeleteMy head spins just trying to square the proposed logic. Seems like a semantic mess to me.