central bank digital currencies · digital central bank issued widely accessible token-based cash...
TRANSCRIPT
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The views expressed herein are my own and may not reflect the views of the Federal Reserve Bank of
New York or the Federal Reserve System
Central bank digital currencies
Antoine Martin
Federal Reserve Bank of New York
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Central bank digital currency (CBDC): What are we talking
about?
The “money flower” is a useful device to clarify the
discussion
What is a CBDC useful for?
It could depend on the type of CBDC—I will focus on retail
CBDC
Is the central bank or the private sector better positioned to
offer a digital currency?
Overview
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CBDC: What are we talking about?
Central bank issuedDigital
Widely
accessible Token-based
Cash
CB reserves and
settlement
accounts
CB digital tokens
(wholesale only)
CB digital
tokens
(general
purpose)
Bank
deposits
Private digital
tokens
(wholesale
only)
CB accounts
(general purpose)
: CBDC Private digital tokens
(general purpose)
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Payment economics distinguishes between “store-of-
value” and “account-based” systems
Example of store-of-value system: Cash
Example of account-based system: Fedwire
Tokens could be related to some notion of privacy
In contrast to an account, it should be possible to obtain a
token without having to register or sign up
What are tokens anyway?
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CB wholesale digital tokens:
Some CBs are experimenting with blockchain applications
of such token
General purpose CB accounts:
Perhaps a good idea but not a new idea (e.g., Tobin 1985)
General purpose CB digital tokens:
Some CBs are considering the costs and benefits of such
tokens
Different types of CBDCs
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What are CBDCs useful for?
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Many arguments have been made, including:
Financial inclusion
Better monetary policy transmission
Increased financial stability
Since this is not a new idea, why now?
Was this a good idea all along and we never realized it?
Has technology changed the costs and benefits?
What are general purpose CB accounts useful for?
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Many arguments for and against general purpose CB
accounts also apply to CB digital tokens
Again, most of this is not really new
Why tokens rather than accounts?
Economic theory suggests that in many standard setting
accounts are better than tokens
Tokens make more sense for a cryptocurrency like bitcoin,
which is designed to make payment even absent trust
The benefits of tokens when issued by a CB, a trusted third
party, is less clear
What are general purpose CB tokens useful for?
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A new reason to think about
central bank digital tokens
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Some CBs have started to think about the need for CB
digital tokens (and/or accounts) if cash disappears
We should remember that most payment systems rely on
the cooperation between the CB and the private sector
Would the disappearance of cash make us think differently
about the current distribution of roles?
Do new technologies affect the way we think of this
distribution of roles?
CB tokens as a substitute for cash
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In countries where cash usage is falling rapidly, a key
reason seems to be that alternatives are better
That seems like a good thing
Does the disappearance of cash introduce new problems?
Two interesting questions:
Are remaining payment methods sufficiently safe?
Do private systems need a public back-up system?
CB involvement is one of many potential solutions
Why CB tokens if cash disappears?
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In many countries, deposit insurance make payments
using bank deposits safe
Another way to protect deposits would be to allow banks
to collateralize them in a convenient way
Garratt, Martin, McAndrews, and Nosal propose
“Segregated Balance Accounts”
Are there benefits of a central bank liability compared to a
private sector liability that is risk-free?
There are any ways to make a payment safe
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When talking about CBDC it is useful to specify exactly
what we are talking about
A number of CBs are exploring different types of CBDC
It is not yet clear if any of them will adopt a CBDC
When it comes to digital currencies, we should think about
areas where central banks are likely to be better than the
private sectors, and those where they are not
To sum up