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> The dollar itself is physical. That's not true in practice. Dollar may exist in physical form but most of them or any currency exist in purely digital world.

• spiralx 4y ago
  CBDCs are a digital equivalent to cash more than currency as a whole - they are something you hold yourself in a "wallet" instead of existing as bank deposits, and in fact they could end up reducing the need for current accounts by providing digital and automated payments directly, although banks will still serve other purposes and most will likely still not want to hold all their own money for security and just general change aversion.
• nwah1 4y ago
  The Fed doesn't create new base money, and they cannot really offer "stimulus" the way Congress can. They can just change the asset classes on their books. But because of their unique position, the choice of those asset classes affects how much money ends up back in their reserve accounts. Only the Treasury can create new money. The proliferation of banknotes, which are considered legal tender, makes it a bit more complex and thus money in your checking account is money by some definition, but could not exist without base money. The Fed can change the incentives that drive the level of debt, and in that way manage the money supply. It is for this reason that some call CBDC "digital base money." It is the money that is in reserves or cash, not merely an IOU... even if that IOU is federally insured. But yea, monetary reserves held in Federal Reserve accounts is also digital already.