The UK isn't going to sit idly by while other countries launch digital currencies. Today, the Bank of England and HM Treasury announced that they will jointly explore "a new form" of virtual money for the public and private sector. A dedicated taskforce has been appointed to assess the risks and practicalities of introducing a digital currency. To help glean new use cases, officials will consult with stakeholders including banks, fintechs, payment infrastructure providers, and technology companies. For now, the UK is simply doing its research and has made no commitment to feasibly act.
Engadget
Saqib Shah - The UK is considering starting a digital currency
To help glean new use cases, officials will consult with stakeholders including banks, ...
ReplyDeleteAnd there's the problem: banks are considered stakeholders rather than a perennial source of injustice and instability.
Obviously Andrew is right: private banks are guaranteed to lobby for what's in their interest, not what's in the interests of the country as a whole. But there is a role that private banks could play here, as follows.
ReplyDeleteMany are concerned that CBDC makes it easy for the state to snoop on peoples' financial transactions. But there's a way round that (set out long ago by Ben Dyson, who founded Positive Money). That's to farm out the administration of CBDC accounts to private banks. I.e. every private bank would offer an account which was 100% backed by base money. Plus it would remit net deposits into those accounts to the central bank at the end of each working day (or the private bank would WITHDRAW from its account at the central bank if there were net withdrawals from its collection of "CBDC" accounts).
The Music Man "Ya Got Trouble"
ReplyDeleteYa got knickerbocking bankers.
Capital One "Bankers" Commercial
ReplyDeleteA partial solution, which is requite for other reforms being enacted, is getting the public to recognize that banks are public-private "partnerships" in which the banks act as the agents of the government in administering commercial credit using the government's unit of account, with access to the central bank for government credit and also a government deposit guarantee. albeit limited. For this banks accept regulation that governs how they distribute tax credits into the economy.
ReplyDeleteNothing will happen as long as the banks have everyone under the illusion that they are private institutions like other private institutions when they are not.
This sort of follows from public recognition that the currency is a tax credit issued by the government, which the government promises to redeem at its payments office in satisfaction of financial obligations to the government.
In other words it’s a problem of education to change the level of collective consciousness about "money. That could and probably would result in institutional change in the direction of reform.
Yes, banks are not truly private and the solution is to MAKE them truly private.
ReplyDeleteOtherwise, we have gross violation of equal protection under the law in favor of the more so-called "creditworthy", be they richer and/or more politically favored.
Also, your conflation of private, including privately CREATED(!), bank deposits with tax credits is not just wrong from an accounting viewpoint (as you well know, it's fiat that is tax credits) but also from the viewpoint that only Congress may appropriate fiat, not some damned public-private partnership when they "lend."
But congratulations on reaching the absurd end of your logic in support of a government-privileged usury cartel.
"Public-private partnership" SOUNDS good. Indeed, Warren Mosler uses that phrase. But there's a big question for those backing that "partnership" to answser, as follows.
ReplyDeleteMoney created by private banks is backed by govt (via deposit insurance and bank bail outs). I.e. that privately created money pretty much equals Fed issued dollars. Now given a need for stimulus, why should money lenders (i.e. private banks) have the exclusive right to create that home made money? Why not any other industry chosen at random? Why not let every household in the country create a limited amount of government backed home made money? That would come to the same thing as a helicopter drop.
Ralph, "money" is created by government spending and commercial bank lending. The government delegates creation of credit creation through loans to private "contractors," to reduce the administrative involvement of the government. The banks are really government agents, operating based on a franchise for distributing USD through credit. Banks must taken on some risk to keep the game straight. They are supposed to profit from prudent credit creation. The reality has become very different as banks ran away with the privilege owing to influence and arguably capture.
ReplyDeleteDelegation of credit creation is a special relationship banks have with government to do this having assess to the cb. Could be any institutional or industry, but the banking industry was already in place since the Renaissance. Why reinvent the wheel? It was a natural progression, especially since the institution of central banking in the 17th c.