Thanks for the support John. The cash question is something that I focus on a lot separately from CBDC, whereas these pieces are focussing in on CBDC in particular, so I'm probably not going to do any extensive cash analysis in the next piece. There will, however, be a section that is relevant - one of the big ideological attacks on cash emerges from the acceleration/automation drive inherent in large-scale capitalist systems - aka. cash has higher 'friction', localisation and human-scale dynamics whereas digital systems (of which CBDC would be part) are at the leading edge of large-scale acceleration - aka. the resource-eating corporate machine hates cash systems because they slow things down and localise things relatively more than digital systems do, and there's an ecological angle in there
Hey Brett, excellent article, thank you. Do you have any further material or links on how I can imagine accessing CBDCs as a consumer? What role will the payment networks play? Since the L2 (deposits, savings, payments) is currently completely provided for by private companies (at least in the U.S. / Europe), does this mean that the gov needs to recreate the L2 but on L1? Thanks!
Hi Julius, sorry for slow reply here - there's a tonne of new info on CBDC proposals coming out so I'm sure you can find much more info online, but the current proposals in general are trying to insert the banking sector or private sector players between you and the central bank to act as 'wallet providers'. It seems likely that, if the proposals go through, there will be extensive reliance on private sector players that are already operating in the L2 space
Feb 13, 2023·edited Feb 13, 2023Liked by Brett Scott
Thanks, I enyoed the read! But I don‘t really get your hot take to be honest: Why would central banks see their layer 1 influence in danger? Physical cash may be less used, but this means these transactions just shifted to the layer 1 electronic ledger controlled by the central bank…
They could increase their influence with CDBC because they could provide interest (or charge negative interest) without layer 2 players grabbing some margin, but thats not connected to the physical cash usage declining.
My hot take: CDBC will not happen because no central bank has the capacity to engage in all the KYC & regulation tasks the layer 2 players deal with when everyone wants to open accounts with them.
Well, as I noted in Meditation 4, the main issue isn't about them feeling like they are under threat. The main issue is about the public losing confidence in Layer 2 digital money in the context of a decline in cash, which in turn is spurring the debates about a 'replacement' in the form of CBDC
One factual question I have arising from undertaking Meditation 3: What allows a bank to take part in the Credit Creation of Money and thus gain that power you speak of to direct the economy?
Could I declare myself a bank and just legally do this? I assume not; you hint that the state would need to authorise such?
Can/do *all* institutions that call themselves banks do this? I suspect not..?
Is it only banks in the 'central bank digital currency' club that take part in this..? If so, why?
Hi Shaun, if you get a banking licence you can do this. In very crude terms, if you were starting a new UK bank from scratch, you'd be required to get a central bank account (for your digital reserves), and then you'd 'capitalise' that account by raising a certain minimum amount of money from shareholders to act as a buffer, after which you could start the business of issuing digital casino chips ('deposits'), either by 1) issuing them in exchange for new reserves from depositors (people who are 'putting their money in the bank') or 2) issuing them in exchange for loan agreements from borrowers (people who are 'borrowing money'), but you'd be subject to various regulatory ratios that try place some controls on that process
An alternative type of licence is the 'e-money' license, which are for Layer 3 institutions that are not going to do credit creation, but are only issuing fully-backed chips. I can explain any of this further if you'd like
Off the back of this I also just read Deloitte's "From dream to reality: obtaining a banking licence", which gave me a better sense of what *that* involves. Sounds as though there's indeed a great deal of gatekeeping around it, as I expected.
And I read a bit more about the difference between e-money licences and banking licences too. I greatly appreciate the guidance in this next step of my understanding.
Mar 18, 2023·edited Mar 18, 2023Liked by Brett Scott
Hey Bret! I've now read a few of your articles carefuly and I found them very insightful. I lean libertarian, though not in its extreme anarchist Citadel/seasteading form (in fact I find these visions only slightly less dystopian than a totalitarian world government). So I naturally sympathize with the ideas behind Bitcoin like privacy, decentralization and theoretical unseizability as proposed by people like Alex Gladstein, Troy Cross or Jeff Booth. However, I have some doubts regarding its long term security budget as well as its future acceptance, specially because it's really just a token (21 million, why not 20, 19 or 50, 69, etc.?). What do you think about a currency really pegged to energy (Bitcoin is only very loosely pegged to it) which would still (most likely) be deflationary, but would behave much more naturally (it would be gradual rather than sudden) and have a real connection to the way we consume the ressources of our planet. Currently our inflationary fiat system makes us need an exponential, unsustainable growth, which is mostly an effect of financialization of the economy. I'm no Malthusian, but also I don't think the current state of things is sustainable. What is your opinion on this?
Hi Tomás, this is probably too big and divergent a topic to cover in a comments section to a CBDC article, but I'd be keen to do an article on 'energy backed' and asset-backed currency in future
Couple things to note:
1) In the context of a powerful fiat system, many of these systems actually end up operating as fiat-denominated countertrade objects (e.g. if I'm trading vouchers for resources, they will often be denominated in the dollar price of those resources, rather than in the resources themselves)
2) I know people with an ecological mindset sometimes end up thinking that the act of constraining the monetary system will somehow end up acting as a constraint on human economic expansion, and that to be sustainable our money must somehow mirror commodities, but this can also be a category error - monetary systems record systems of obligation between people, and it's not apparent that they are *supposed* to mirror commodities
3) Many of these commodity-backed voucher currencies are borrowing from commodity theories of money (or a commodity orientation to money - see Zero is the Future of Money https://brettscott.substack.com/p/the-crypto-credit-alliance), which may actually be a flawed paradigm of thinking. Often what's happening is that a person is wanting to shift from a vision of money as 'fictional commodity' to a vision of money as a real commodity (or constrained by a real commodity). An alternative approach is to move away from the commodity thinking, and to think about how to alter the credit dynamics of money (this is what the mutual credit community does, for example)
4) I know you acknowledge this, but Bitcoin is not 'pegged' to energy. Bitcoin requires energy to produce, so its *cost* of production mirrors energy prices, but it's own price in a dollar market in no way has to mirror energy, other than to say if a miner is trying to sell Bitcoin units for lower than their input costs then they will make a loss (like any business trying to sell products for lower than the cost of their inputs)
5) It's popular in monetary reform movements to claim that the fiat system 'forces' us to growth, but that's equally the result of being enslaved to the profit-motive: bear in mind that the reason why the banking sector pushes out L2 money is that they are trying to make profits in L1 money, and we also have bankruptcy laws that destroy bank loan assets (i.e. if they make bad loans that cannot be repaid, they get eliminated by bankruptcy laws, so we're not mathematically imprisoned by bank debt - it's a political issue whether or not we have to abide by it). It's probably worth analysing the fiat money system as being but one component of a much larger systemic environment in which the logic of monetary accumulation has become all-powerful, and holds us hostage at a systemic level, rather than imagining that it's just the monetary system itself that is calling the shots - I know that sounds as bit abstract, but I'm writing this response quickly. I'll try clarify in future
"the power of their Layer 2 digital chips depends on the public believing they can be redeemed for state money, "
That state money's merit to the public consists, as to the background root cause, of solely its power to pay taxes, Mosler would say. As such, no one cares about Moneymatic machines, now do they--not for money's merit as "state money," that is. Comments?
I’m with except I’m not totally convinced by this (summarised in your comment above):
“ The main issue is about the public losing confidence in Layer 2 digital money in the context of a decline in cash, which in turn is spurring the debates about a 'replacement' in the form of CBDC”
I hear of people losing faith in layer one due to there being too much money. But I don’t follow how an absence of physical cash in life will lead people to question the legitimacy of layer 2. After all, we rely on it more than ever now. And the banks are insured by the government so money that disappears in one is promised to be reappeared in another.
Firstly, the losing faith you refer to applies to all forms of money - inflation affects all layers at once. Inflation is specific to L1 money
Secondly, nobody has ever experienced a situation in which there isn't actually cash to fall back on, so you can't know what the psychological affect is. I guarantee that central bankers have to think about stuff like that - they have to model scenarios in which there is, for example, a generalised crisis in which the public loses faith in the overall banking sector, and when the public retreats to state money. It's well known in central banking circles that when there are crises people try get cash - even at the beginning of the pandemic there was a big spike in cash demand, because people lose faith in the banking sector in the context of potential crises (even when deposit insurance is there - this is also why there are bank runs where everyone tries to 'exit the casino' and redeem their Layer 2 chips for state cash). This is what Meditation 5 was introducing - there are various factors at play when central bankers are thinking about CBDC, but one of them is definitely this concern around systemic financial instability in the hypothetical scenario of a drastic reduction in cash infrastructure
The completion a few weeks ago of the last round of re-selling of UK Bonds purchased under QE / LSAP indicates a loss of £150bn between purchase price and re-sale price. This ultimately represents a transfer from the taxpayer to the private financial sector.
The underlying instability of a monetary system based on private debt to commercial banks at a time when the public is resistant to taking on more debt was not addressed post-2008, therefore will happen again.
Sure the banks are only too happy to take handouts from the state ad-infinitum in order to maintain their 'too-big-to-fail' position at the heart of the monetary system.
The point of CBDC is that it provides a tool for government to reimburse losses to account holders with newly created CBDC so they can let private banks go to the wall when they go bankrupt. Since every citizen and business has a unique identifier (tax no. or NI number in the UK) this can happen without the active participation of said person or business. Furthermore, should the holder of CBDC then choose to risk that money by transferring it to a commercial bank, The Central Bank would be under no obligation to issue a second round of reimbursements, and the Consumer Credit Guarantee Scheme could be wound up. Perhaps funds held in 'building society' type institutions, i.e. true intermediaries, could be treated more favourably.
Issuance and control of the money supply should be as much a function of the state as defence of the realm. To have either of these functions in private hands is an invitation to treason.
Concerns around resulting excessive 'state-power' should be addressed as a matter of democracy-deficit, rather than one of monetary policy.
Imaginary's eh? Physician heal thyself. I wonder if you're suffering the symptom of most "experts" in that by focusing on your speciality you lose sight of some of the bigger picture? (although, as evidenced here and throughout your work, you do introduce nuance and uncertainty and introspection.) Please take a peek inside my "imaginary" (in case you missed it, from August 2021) https://thephilosophicalsalon.com/a-self-fulfilling-prophecy-systemic-collapse-and-pandemic-simulation/
There's plenty of people in the world who are producing big meta-narratives in the style of the one you posted in the link. I don't really see that as my job though, and it's not really my style. Thanks for the feedback though
No, that's what I was saying really. But: imagine forms of money as a set of tools & you are looking at the toolkit and how they operate. Surely knowing what the tools may be used *for* is crucially important; the meta-narrative is essential (and probably your analysis of it is something you deliberately leave out.) I brought and read Cloudmoney hoping for some of that so was somewhat disappointed. The question of local/alternative currencies is something I spent a long time researching well over a decade ago, is that within your purview? If the linked meta-analysis is largely correct, if The Great Reset really is about what happens when the next, catastrophic, financial crisis hits (and the "pandemic" was in reality part of a controlled-demolition to bring it about in timely fashion & implement CBDCs) then cash alone won't save us...
I don't claim that cash alone will save us. And yes, I have a lot of experience with alternative currency stuff, including local currencies/mutual credit etc.
Look, I'm sorry, but my mind doesn't really work in the same way as the guy who wrote that piece you like. When I read it I'm not filled with a sense of confidence in his analysis. It presumes waaay to much global coordination for me. Maybe you like that style of analysis, but I'm not going to make stuff like that
The answer is to have commercial banks act as Agents of the Central Bank. Each bank would run a subsidiary ledger of the Central Bank, This ledger would record loans made by the bank in CBDC on ons side and the amount of CBDC held by its customers on the other. Existing loans and deposits could be switched overnight from the bank's books to the Central Bank subsidiary ledger. The banks would still earn interest on the loans they make on behalf of the Central Bank and still manage the payments system. The only difference is that from then on, no one could lose their deposit if a bank went belly up, as their CBDC would not be a liability of the bank, but of the Central Bank. The Central Bank would have no right to know anything about individual accounts. The banks would only report the total of their ledger to the Central Bank. Access to each account by anyone other then the bank and the account holder would require due process, as now. Also, within limits, CBDC could be downloaded to a phone or electronic card to be paid from device to device to retain anonymity, just like paper money. This would also limit risk due to a system outage.
I have not yet read part 2. As a crypto trader, my first thought is: it sounds a bit naive. Offering digital central bank money instead of cash clearly has no benefits for citizens. The advantage is exclusively on the side of the central bank ( and private companies acting on behalf of the central bank), which can control all aspects of the digital wallet at will. It's like giving my private keys and all personal data to an administrator who is known to be untrustworthy.
Monetary systems are not really about 'offering benefits to citizens' - they're about power and keeping the capitalist powers-that-be up and running. As I point out, central banks are not thinking 'what will benefit citizens' when they're making these decisions. They're thinking 'how do we keep the monetary system that underpins global capitalism intact'. Given that the private sector corporations have systematically undermined the cash system, the central banks are being pushed towards the digital systems to avoid the systemic contradictions that emerge from the erosion of cash
For this civilian, this is a quite brilliant read. Thank you. I have a request for Part 2. Would it be possible to add a few lines about where a member of the ecological class might stand on the cash question? or should? https://www.buecherchorb.ch/detail/ISBN-9781509555062/Latour-Bruno/On-the-Emergence-of-an-Ecological-Class
Thanks for the support John. The cash question is something that I focus on a lot separately from CBDC, whereas these pieces are focussing in on CBDC in particular, so I'm probably not going to do any extensive cash analysis in the next piece. There will, however, be a section that is relevant - one of the big ideological attacks on cash emerges from the acceleration/automation drive inherent in large-scale capitalist systems - aka. cash has higher 'friction', localisation and human-scale dynamics whereas digital systems (of which CBDC would be part) are at the leading edge of large-scale acceleration - aka. the resource-eating corporate machine hates cash systems because they slow things down and localise things relatively more than digital systems do, and there's an ecological angle in there
This is a thoughtful, illuminating article. Thank you!
Thanks Joey
Amazing. Thank you very much!
Glad you like it Steph
Holy shit, this is so good.
Would love to see your meditation ideas in the scope of western world and US dollar.
World is already transacting in dollar and crypto is as well.
Feels like if CBDC exists, it will probably come in a form of some privacy enabled public ledger.
^If you disagree would love to see what frameworks I should have in order to alter this belief.
Thanks for the support Jacob. I'll try address more of those topics you bring up in future
Hey Brett, excellent article, thank you. Do you have any further material or links on how I can imagine accessing CBDCs as a consumer? What role will the payment networks play? Since the L2 (deposits, savings, payments) is currently completely provided for by private companies (at least in the U.S. / Europe), does this mean that the gov needs to recreate the L2 but on L1? Thanks!
Hi Julius, sorry for slow reply here - there's a tonne of new info on CBDC proposals coming out so I'm sure you can find much more info online, but the current proposals in general are trying to insert the banking sector or private sector players between you and the central bank to act as 'wallet providers'. It seems likely that, if the proposals go through, there will be extensive reliance on private sector players that are already operating in the L2 space
Thanks, I enyoed the read! But I don‘t really get your hot take to be honest: Why would central banks see their layer 1 influence in danger? Physical cash may be less used, but this means these transactions just shifted to the layer 1 electronic ledger controlled by the central bank…
They could increase their influence with CDBC because they could provide interest (or charge negative interest) without layer 2 players grabbing some margin, but thats not connected to the physical cash usage declining.
My hot take: CDBC will not happen because no central bank has the capacity to engage in all the KYC & regulation tasks the layer 2 players deal with when everyone wants to open accounts with them.
Well, as I noted in Meditation 4, the main issue isn't about them feeling like they are under threat. The main issue is about the public losing confidence in Layer 2 digital money in the context of a decline in cash, which in turn is spurring the debates about a 'replacement' in the form of CBDC
Hey Brett, this is so brilliant, as ever.
One factual question I have arising from undertaking Meditation 3: What allows a bank to take part in the Credit Creation of Money and thus gain that power you speak of to direct the economy?
Could I declare myself a bank and just legally do this? I assume not; you hint that the state would need to authorise such?
Can/do *all* institutions that call themselves banks do this? I suspect not..?
Is it only banks in the 'central bank digital currency' club that take part in this..? If so, why?
Hi Shaun, if you get a banking licence you can do this. In very crude terms, if you were starting a new UK bank from scratch, you'd be required to get a central bank account (for your digital reserves), and then you'd 'capitalise' that account by raising a certain minimum amount of money from shareholders to act as a buffer, after which you could start the business of issuing digital casino chips ('deposits'), either by 1) issuing them in exchange for new reserves from depositors (people who are 'putting their money in the bank') or 2) issuing them in exchange for loan agreements from borrowers (people who are 'borrowing money'), but you'd be subject to various regulatory ratios that try place some controls on that process
An alternative type of licence is the 'e-money' license, which are for Layer 3 institutions that are not going to do credit creation, but are only issuing fully-backed chips. I can explain any of this further if you'd like
Thanks again Brett!
Off the back of this I also just read Deloitte's "From dream to reality: obtaining a banking licence", which gave me a better sense of what *that* involves. Sounds as though there's indeed a great deal of gatekeeping around it, as I expected.
And I read a bit more about the difference between e-money licences and banking licences too. I greatly appreciate the guidance in this next step of my understanding.
Awaiting your future scribblings excitedly!
Hey Bret! I've now read a few of your articles carefuly and I found them very insightful. I lean libertarian, though not in its extreme anarchist Citadel/seasteading form (in fact I find these visions only slightly less dystopian than a totalitarian world government). So I naturally sympathize with the ideas behind Bitcoin like privacy, decentralization and theoretical unseizability as proposed by people like Alex Gladstein, Troy Cross or Jeff Booth. However, I have some doubts regarding its long term security budget as well as its future acceptance, specially because it's really just a token (21 million, why not 20, 19 or 50, 69, etc.?). What do you think about a currency really pegged to energy (Bitcoin is only very loosely pegged to it) which would still (most likely) be deflationary, but would behave much more naturally (it would be gradual rather than sudden) and have a real connection to the way we consume the ressources of our planet. Currently our inflationary fiat system makes us need an exponential, unsustainable growth, which is mostly an effect of financialization of the economy. I'm no Malthusian, but also I don't think the current state of things is sustainable. What is your opinion on this?
Hi Tomás, this is probably too big and divergent a topic to cover in a comments section to a CBDC article, but I'd be keen to do an article on 'energy backed' and asset-backed currency in future
Couple things to note:
1) In the context of a powerful fiat system, many of these systems actually end up operating as fiat-denominated countertrade objects (e.g. if I'm trading vouchers for resources, they will often be denominated in the dollar price of those resources, rather than in the resources themselves)
2) I know people with an ecological mindset sometimes end up thinking that the act of constraining the monetary system will somehow end up acting as a constraint on human economic expansion, and that to be sustainable our money must somehow mirror commodities, but this can also be a category error - monetary systems record systems of obligation between people, and it's not apparent that they are *supposed* to mirror commodities
3) Many of these commodity-backed voucher currencies are borrowing from commodity theories of money (or a commodity orientation to money - see Zero is the Future of Money https://brettscott.substack.com/p/the-crypto-credit-alliance), which may actually be a flawed paradigm of thinking. Often what's happening is that a person is wanting to shift from a vision of money as 'fictional commodity' to a vision of money as a real commodity (or constrained by a real commodity). An alternative approach is to move away from the commodity thinking, and to think about how to alter the credit dynamics of money (this is what the mutual credit community does, for example)
4) I know you acknowledge this, but Bitcoin is not 'pegged' to energy. Bitcoin requires energy to produce, so its *cost* of production mirrors energy prices, but it's own price in a dollar market in no way has to mirror energy, other than to say if a miner is trying to sell Bitcoin units for lower than their input costs then they will make a loss (like any business trying to sell products for lower than the cost of their inputs)
5) It's popular in monetary reform movements to claim that the fiat system 'forces' us to growth, but that's equally the result of being enslaved to the profit-motive: bear in mind that the reason why the banking sector pushes out L2 money is that they are trying to make profits in L1 money, and we also have bankruptcy laws that destroy bank loan assets (i.e. if they make bad loans that cannot be repaid, they get eliminated by bankruptcy laws, so we're not mathematically imprisoned by bank debt - it's a political issue whether or not we have to abide by it). It's probably worth analysing the fiat money system as being but one component of a much larger systemic environment in which the logic of monetary accumulation has become all-powerful, and holds us hostage at a systemic level, rather than imagining that it's just the monetary system itself that is calling the shots - I know that sounds as bit abstract, but I'm writing this response quickly. I'll try clarify in future
Such a good article! I enjoyed looking at the issue from each of the perspectives you mention. So it seems, CBDCs a but further than people think?
"the power of their Layer 2 digital chips depends on the public believing they can be redeemed for state money, "
That state money's merit to the public consists, as to the background root cause, of solely its power to pay taxes, Mosler would say. As such, no one cares about Moneymatic machines, now do they--not for money's merit as "state money," that is. Comments?
Sure, redeemability for taxes is a core part of the underlying mechanism for anchoring government-issued money
Great essay. Thank you.
I’m with except I’m not totally convinced by this (summarised in your comment above):
“ The main issue is about the public losing confidence in Layer 2 digital money in the context of a decline in cash, which in turn is spurring the debates about a 'replacement' in the form of CBDC”
I hear of people losing faith in layer one due to there being too much money. But I don’t follow how an absence of physical cash in life will lead people to question the legitimacy of layer 2. After all, we rely on it more than ever now. And the banks are insured by the government so money that disappears in one is promised to be reappeared in another.
Firstly, the losing faith you refer to applies to all forms of money - inflation affects all layers at once. Inflation is specific to L1 money
Secondly, nobody has ever experienced a situation in which there isn't actually cash to fall back on, so you can't know what the psychological affect is. I guarantee that central bankers have to think about stuff like that - they have to model scenarios in which there is, for example, a generalised crisis in which the public loses faith in the overall banking sector, and when the public retreats to state money. It's well known in central banking circles that when there are crises people try get cash - even at the beginning of the pandemic there was a big spike in cash demand, because people lose faith in the banking sector in the context of potential crises (even when deposit insurance is there - this is also why there are bank runs where everyone tries to 'exit the casino' and redeem their Layer 2 chips for state cash). This is what Meditation 5 was introducing - there are various factors at play when central bankers are thinking about CBDC, but one of them is definitely this concern around systemic financial instability in the hypothetical scenario of a drastic reduction in cash infrastructure
The completion a few weeks ago of the last round of re-selling of UK Bonds purchased under QE / LSAP indicates a loss of £150bn between purchase price and re-sale price. This ultimately represents a transfer from the taxpayer to the private financial sector.
The underlying instability of a monetary system based on private debt to commercial banks at a time when the public is resistant to taking on more debt was not addressed post-2008, therefore will happen again.
Sure the banks are only too happy to take handouts from the state ad-infinitum in order to maintain their 'too-big-to-fail' position at the heart of the monetary system.
The point of CBDC is that it provides a tool for government to reimburse losses to account holders with newly created CBDC so they can let private banks go to the wall when they go bankrupt. Since every citizen and business has a unique identifier (tax no. or NI number in the UK) this can happen without the active participation of said person or business. Furthermore, should the holder of CBDC then choose to risk that money by transferring it to a commercial bank, The Central Bank would be under no obligation to issue a second round of reimbursements, and the Consumer Credit Guarantee Scheme could be wound up. Perhaps funds held in 'building society' type institutions, i.e. true intermediaries, could be treated more favourably.
Issuance and control of the money supply should be as much a function of the state as defence of the realm. To have either of these functions in private hands is an invitation to treason.
Concerns around resulting excessive 'state-power' should be addressed as a matter of democracy-deficit, rather than one of monetary policy.
Thanks for the comment Kevin - interesting points
Imaginary's eh? Physician heal thyself. I wonder if you're suffering the symptom of most "experts" in that by focusing on your speciality you lose sight of some of the bigger picture? (although, as evidenced here and throughout your work, you do introduce nuance and uncertainty and introspection.) Please take a peek inside my "imaginary" (in case you missed it, from August 2021) https://thephilosophicalsalon.com/a-self-fulfilling-prophecy-systemic-collapse-and-pandemic-simulation/
There's plenty of people in the world who are producing big meta-narratives in the style of the one you posted in the link. I don't really see that as my job though, and it's not really my style. Thanks for the feedback though
No, that's what I was saying really. But: imagine forms of money as a set of tools & you are looking at the toolkit and how they operate. Surely knowing what the tools may be used *for* is crucially important; the meta-narrative is essential (and probably your analysis of it is something you deliberately leave out.) I brought and read Cloudmoney hoping for some of that so was somewhat disappointed. The question of local/alternative currencies is something I spent a long time researching well over a decade ago, is that within your purview? If the linked meta-analysis is largely correct, if The Great Reset really is about what happens when the next, catastrophic, financial crisis hits (and the "pandemic" was in reality part of a controlled-demolition to bring it about in timely fashion & implement CBDCs) then cash alone won't save us...
I don't claim that cash alone will save us. And yes, I have a lot of experience with alternative currency stuff, including local currencies/mutual credit etc.
Look, I'm sorry, but my mind doesn't really work in the same way as the guy who wrote that piece you like. When I read it I'm not filled with a sense of confidence in his analysis. It presumes waaay to much global coordination for me. Maybe you like that style of analysis, but I'm not going to make stuff like that
Understood. Thanks for taking the time.
The answer is to have commercial banks act as Agents of the Central Bank. Each bank would run a subsidiary ledger of the Central Bank, This ledger would record loans made by the bank in CBDC on ons side and the amount of CBDC held by its customers on the other. Existing loans and deposits could be switched overnight from the bank's books to the Central Bank subsidiary ledger. The banks would still earn interest on the loans they make on behalf of the Central Bank and still manage the payments system. The only difference is that from then on, no one could lose their deposit if a bank went belly up, as their CBDC would not be a liability of the bank, but of the Central Bank. The Central Bank would have no right to know anything about individual accounts. The banks would only report the total of their ledger to the Central Bank. Access to each account by anyone other then the bank and the account holder would require due process, as now. Also, within limits, CBDC could be downloaded to a phone or electronic card to be paid from device to device to retain anonymity, just like paper money. This would also limit risk due to a system outage.
I have not yet read part 2. As a crypto trader, my first thought is: it sounds a bit naive. Offering digital central bank money instead of cash clearly has no benefits for citizens. The advantage is exclusively on the side of the central bank ( and private companies acting on behalf of the central bank), which can control all aspects of the digital wallet at will. It's like giving my private keys and all personal data to an administrator who is known to be untrustworthy.
Monetary systems are not really about 'offering benefits to citizens' - they're about power and keeping the capitalist powers-that-be up and running. As I point out, central banks are not thinking 'what will benefit citizens' when they're making these decisions. They're thinking 'how do we keep the monetary system that underpins global capitalism intact'. Given that the private sector corporations have systematically undermined the cash system, the central banks are being pushed towards the digital systems to avoid the systemic contradictions that emerge from the erosion of cash
Are you familiar with Richard Werner's view on why central bankers want to compete with banks? I think its missing here
Hi Hadar, I know Richard's work in general, but if you have a particular link to a particular article I'm happy to comment on it