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Why is cash withdrawals from circulation be important to CBDC? Btw I don't think OP argued citizens wouldn't need an account.

• bobthepanda 5y ago
  > Why is cash withdrawals from circulation be important to CBDC? >> For example, cash limits how negative rates can go. If cash were to become scarce and most money were held as M0, the central bank could enforce negative interest rates by clawing back M0. This would only really be effective if CBDC became prevalent enough to actually make a dent in money supply. What proportion of money would have to be CBDC for this to actually have an impact, and would we get there by just pure issuance of CBDC or by taking cash out of circulation and replacing it with CBDC? > Btw I don't think OP argued citizens wouldn't need an account. >> CBDCs are a way to give the public M0 without putting the central bank into the retail banking business. I don't know how you would avoid retail banking unless you were to issue it via a means other than an account.
  • deleted 5y ago
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  • aliyfarah 5y ago
    >I don't know how you would avoid retail banking unless you were to issue it via a means other than an account. There's a lot more that goes into retail banking than just having an account. Of course citizens would need an account, how else will they be tracked :) I think the OP meant that the central bank could give customers an account for the sole purpose of holding their digital "crypto" coins and sending/receiving money with it....without having to do provide all the other services that go with retail banking like loans, credit cards etc.