Understanding what CBDCs mean for our monetary system Dear Allen Smith As persons interested in having a just and moral money creation system, we face two paths as we advance. One path is to advocate only for a total change in the monetary system, where private-for-profit banks do not create new money but act as legally obligated intermediaries between borrowers and lenders. The second path is a partial step toward monetary reform, sometimes called side-by-side competition. The central bank, the Fed in the U.S., issues new money called central bank digital currency (CBDC) that competes with commercial bank-created money. As monetary reformers, accepting this second path doesn't mean we are giving up on achieving morality and fairness in our monetary system. It simply means it can be one big step in the right direction. From an accounting perspective, CBDC would be equivalent to cash (coins and notes) and conventional central bank reserves. A nation's central bank would create CBDC and obtain the seigniorage (or the benefit of its first use). The Fed could pass on this benefit by giving CBDC as a gift to the government to meet its budget requirements. Or, the Fed could use it to buy treasury securities (bonds, notes, and bills) or loan it to banks at interest and backed by bank assets (collateral). The Fed and banks could also trade one-to-one CBDC for bankmoney. (There has been talk of CBDC paying interest to people first using this money as a means of introducing this money, but this idea, I believe, has generally been dropped.) The term "bankmoney" is used here to distinguish between commercial bank money and central bank money, and only refers to commercial bank money. Besides being a specific reference, the term "bankmoney" is educational, too, because it signifies that commercial banks have been allowed to create money on account, and when the borrower spends this money to buy a house or purchase goods that bank credit has just become a purchasable medium, or money as we know it. So, let these two paragraphs serve as an introduction to Joseph Huber's presentation for Saturday morning. On the AMI website, more information can be obtained from an interview with Joseph Huber based on his book, The Monetary Turning Point - From Bank Money to Central Bank Digital Currency. The publisher is offering 20% off the book through the Conference. For Monetary reformers wanting to take that deep dive and purchase The Monetary Turning Point, with donated money, the AMI will pay an additional 30% off the original price, making the discount 50% off or half price. The AMI can do this for a maximum of 20 copies. The book is still pricey. If you want the discounts or more information, contact stevenjjwalsh@gmail.com to be one of the twenty. The Fed hasn't issued a CBDC yet, and it is still a choice whether to have it. A law will probably need to be passed in the United States to allow CBDC. The laws of each country would determine the validity of a CBDC. The central banks of six countries - the Bahamas, China, India, Jamaica, and Nigeria have already launched a CBDC. Also, the Eastern Caribbean Central Bank serves some small nations and is the seventh central bank to issue a CBDC (called "DCash). Central banks in other countries (the U.S., the Eurozone, England, Japan, etc.) are all designing and testing CBDCs. Early designs of CBDCs allowed individual customers to have accounts at their central bank, making international transfers more straightforward. Now, the idea is more for customers to have e-wallets, and how that will affect international money transfers remains unclarified, as best I know. CBDCs have their opponents, too. The biggest concern is that CBDCs can be manipulated to help create more top-down authoritarian control. Please come to the Conference to learn and discuss the advantages and disadvantages of CBDCs and this societal choice we have to make. Professor Huber's presentation will be on Saturday at 9 a.m., U.S. Central Time, and afternoon, European Time. Also, CBDCs will get some reference in other presentations too. Register from the the Conference Page. Support Our Cause Be a Part of the Solution Share Share Forward to Friend Forward to Friend Donate American Monetary Institute 1860 Sherman Avenue, Apt 4NE Evanston, IL, 60201, USA Facebook Twitter YouTube American Monetary Institute Copyright © 2023 American Monetary Institute, All rights reserved. You are receiving this email because you opted in via our website. Want to change how you receive these emails? You can update your preferences or unsubscribe from this list. Email Marketing Powered by Mailchimp