3 ms·

Sure, but the "commercial bank money" layer is a feature rather than a bug of the system from the point of view of central bank and commercial banks alike (inve

Sure, but the "commercial bank money" layer is a feature rather than a bug of the system from the point of view of central bank and commercial banks alike (investment costs and risks are reduced by readily available credit at a predictable price, and the broad money supply is elastic in response to demand) and it makes no difference at all to those on either side of the transfer. If you worry about the stability of interbank lending and solvency of banks, you resolve that with legal requirements around lending and reserves, not introducing a new optional form of m0

wcoenen 6y ago
> If you worry about the stability of interbank lending and solvency of banks, you resolve that with legal requirements around lending and reserves, not introducing a new optional form of m0 Scenario 5 in this whitepaper hints that the ECB is considering a CBDC for this reason nonetheless. (Some other reasons are also given in the other scenarios.) They also talk about how a CBDC would be competition for commercial bank money, so the consequences indeed do need to be carefully considered. https://www.ecb.europa.eu/pub/pdf/other/Report_on_a_digital_euro~4d7268b458.en.pdf https://www.ecb.europa.eu/pub/pdf/other/Report_on_a_digital_...