Odd Lots Benoît Cœuré On Central Bank Digital Currencies And The Future Of Monetary Policy
Oct 22, 2020
Benoît Cœuré, head of the BIS Innovation Hub and former ECB Executive Board member, dives into the fascinating world of central bank digital currencies (CBDCs). He discusses their potential impact on the future of monetary policy and how they differ from traditional cash. The conversation highlights the delicate balance between privacy and regulation in CBDC transactions, alongside concerns about public trust. Cœuré also emphasizes the evolving role of central banks in maintaining financial stability, particularly in a post-pandemic economy filled with rising debt challenges.
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Why CBDCs?
- Most money is already digital, so CBDCs address specific concerns like cash disappearance and evolving financial infrastructure.
- CBDCs are central bank liabilities, distinct from commercial bank money or reserves used for monetary policy.
CBDC: A Political Question
- The key question around CBDCs is whether citizens want to use commercial bank money exclusively or maintain direct central bank access.
- The answer varies by region; some trust central banks more than private entities, while others prefer commercial banks or even Bitcoin.
CBDCs and the Financial System
- Central banks aim for a diverse money ecosystem, not a CBDC monopoly, recognizing the value of commercial banks' risk-taking and financial intermediation.
- Active discussion focuses on mitigating risks like CBDCs displacing bank deposits and increasing bank vulnerability.