Central Bank Digital Currency and Sovereign Money Accounts
In a recent message, Professor Huber directs readers to two sections of his website where ‘various path-breaking contributions’ to the current discussion about central bank issued digital cash, include:
Monetary Workarounds. Central bank digital currency and sovereign money accounts. Intermediate approaches to sovereign money reform See: www.sovereignmoney.eu/monetary-workarounds-digital-currency-and-sovereign-money-accounts.
Since about 2013/14 scholars have been looking for an intermediate or gradual approach to monetary reform. If a ‘big bang’ transition from private bankmoney to sovereign central-bank money could not be achieved anytime soon, something less radical might be attainable. The two approaches being in the spotlight are
► central bank issued digital currency (CBDC) based on blockchain technology, and
► sovereign money accounts as an alternative option to bank giro accounts.
Further ideas relate to:
- central bank accounts for everybody
- mobile use of sovereign money accounts
- helicopter money
- safe deposits by way of a voluntary 100% reserve on individual deposits.
The common feature of the former options is to introduce non-cash central-bank money into public circulation, but without directly challenging the present bankmoney privilege. The idea is about giving the nonbank public the option to choose between bankmoney and central-bank money. The two would exist in parallel. By some supporters such an approach is idealised as ‘combining the best of two worlds’, while others, more appropriately, hope for the approach to be a half-way house to full-blown monetary reform that would put an end to the bankmoney privilege. Over time, the central-bank money in public circulation would possibly drive out the bankmoney, thus reverting the historical wrong-headed development of the last hundred years by which bankmoney has driven out sovereign money to about 90% now.
This attractive picture of the Hermann Safe can be seen on the website, though its significance is not apparent to the writer.
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