Pierpaolo Benigno, Linda Schilling, Harald Uhlig, 03 October 2019

The governor of the Bank of England, Mark Carney, recently argued that more thought should be given to creating a global electronic currency. This column, part of the Vox debate on the future of digital money, looks at the challenges for the world economy of adopting a ‘world wide currency’, using a two-country world in which each country has its own national currency and national central bank, but where there is also a global currency in circulation. It suggests that Carney’s wish may be granted, but sooner than expected and in a different manner.  

Dirk Niepelt, 12 September 2019

Plans by Facebook and its partners to launch a global digital currency have the FinTech sphere buzzing with rumours, and regulators, central banks, and ‘old finance’ worried. This column, part of the Vox debate on the future of digital money, argues that while we may be witnessing a seismic shift in the monetary system, Libra’s role in that shift will be an indirect one. By taking the status quo option off the table, Libra or its next best replica will force monetary authorities and regulators to choose between central bank-managed digital currency and riskier private digital tokens.

Tobias Adrian, Tommaso Mancini-Griffoli, 09 September 2019

New entrants are vying to occupy the space once used by paper bills. This column, part of the VoxEU debate on the future of digital money, proposes a simple framework to make sense of who is attempting to pry our wallets open. It argues that the adoption of new digital means of payment could be rapid and bring significant benefits to customers and society, but that the risks must be tackled with innovative approaches and heightened collaboration across borders and sectors. One approach is for central banks to engage in a public–private partnership with fintech firms to provide a safe, liquid, and digital alternative to cash: synthetic central bank digital currency.

Markus K Brunnermeier, Dirk Niepelt, 20 March 2019

Both proponents and opponents of central bank digital currency have suggested that it would fundamentally change the macroeconomy. This column questions this paradigm, arguing that the introduction of such a currency need not alter the allocation nor the price system. Concerns about central bank digital currency choking investment, cutting into banks’ profits, or increasing the likelihood of bank runs are misplaced.

David Andolfatto, 17 March 2019

The idea of a central bank digital currency has prompted a mixed reaction among economists. This column uses a simple theoretical framework to investigate the impact of such a currency on a monopolistic banking sector. There are two main results. First, the introduction of an interest-bearing digital currency increases financial inclusion, diminishing the demand for physical cash. Second, while an interest-bearing digital currency reduces monopoly profit, it need not disintermediate banks in any way. A central bank digital currency may, in fact, lead to an expansion of bank deposits if the resulting competition compels banks to raise their deposit rates.

Sayuri Shirai, 06 March 2019

Recent years have seen the emergence of digital currencies such as Bitcoin as potential private sector money. Central banks are also considering whether to issue their own digital tokens to enable decentralised verification of transactions while maintaining attractive cash-like features. This column lays out the four existing proposals for implementing central bank digital currency. Due largely to technical constraints, however, central banks in general have not found a compelling reason to issue their own digital currency.

Tommaso Mancini-Griffoli, Maria Soledad Martinez Peria, Itai Agur, Anil Ari, John Kiff, Adina Popescu, Céline Rochon, Zoltan Jakab, 15 February 2019

Dirk Niepelt, 20 August 2018

The potential benefits and risks of digital central bank money for use by the general public have been widely debated. This column looks at one aspect that has been somewhat overlooked – the consequences of substituting outside for inside money. ‘Reserves for all’ could increase the incentive to extend credit but might undermine political support for implicit financial assistance to banks. However, the effects need not be disruptive. 

Events

CEPR Policy Research