3 ms·

The central bank (government) issues money in two forms: 1. Paper money (notes and coins) 2. Digital money (deposit account at the central bank) #1 is not pr

The central bank (government) issues money in two forms: 1. Paper money (notes and coins) 2. Digital money (deposit account at the central bank) #1 is not practical for much modern commerce, e.g. online shopping. #2 is only available to banks and a few other select institutions So, most of us don't really use government issued money much. We use money issued by retail banks (credit balances in checking accounts) and, due to deposit guarantee schemes, everyone is happy to accept that private money as if it is government money. Central banks are still exploring model of CBDC. They could expand #2, and allow any of us to hold central bank deposit accounts. But some central bankers worry that they are not the best folks to provide consumer services, so maybe private companies should design and operate the apps which will interface with the central bank's ledger.

xorcist 6y ago
If regular citizens could get an account with the central bank, with a specified protocol and digital currency, there could be several providers in open competition using this protocol. Switching banks would become like switching email clients. They could expose new functionality over an existing prococol. But it would also introduce new problems, malware banks could proliferate just like malware flashlight apps. These comments threads always attracts comments like how these are not trustless, not mined by anyone etc. That misses the point. CBDCs are exciting. Citizens never had an account with central banks before.
- GoblinSlayer 6y ago
  Currently digital money are used for the reserve deposits of commercial banks at central banks. If it keeps working this way, it won't be just a client, and you won't be able to switch it easier than now.
- sanxiyn 6y ago
  I agree. CBDC is super exciting. We could get rid of deposit guarantee scheme, which is an abomination, once CBDC is in place.

xorcist 6y ago

If regular citizens could get an account with the central bank, with a specified protocol and digital currency, there could be several providers in open competition using this protocol. Switching banks would become like switching email clients. They could expose new functionality over an existing prococol. But it would also introduce new problems, malware banks could proliferate just like malware flashlight apps. These comments threads always attracts comments like how these are not trustless, not mined by anyone etc. That misses the point. CBDCs are exciting. Citizens never had an account with central banks before.

GoblinSlayer 6y ago
Currently digital money are used for the reserve deposits of commercial banks at central banks. If it keeps working this way, it won't be just a client, and you won't be able to switch it easier than now.
sanxiyn 6y ago
I agree. CBDC is super exciting. We could get rid of deposit guarantee scheme, which is an abomination, once CBDC is in place.