Speaker 1: Hello, and welcome to another episode of the Odd Thoughts Podcast.
Speaker 1: I'm Tracy Alloway and I'm Joe Wisenthal. Joe, we like
Speaker 1: to talk about money, don't we. And you know what
Speaker 1: I realized the other day, there's Well, we've spoken a
Speaker 1: lot about different types of money. So we've done cash,
Speaker 1: We've done historical forms of money, We've done a ton
Speaker 1: on bitcoin, ethereum cryptocurrencies. We've even talked about that time
Speaker 1: you develop your own cryptocurrency. But there's one type of
Speaker 1: money that we haven't actually done an episode on yet.
Speaker 1: Tell me more so. There is a type of money
Speaker 1: that sort of straddles the world of digital currencies and
Speaker 1: traditional forms of money, I think, and that is the
Speaker 1: central bank digital currency or c d C for short.
Speaker 1: Oh yeah, No, this is an interesting area because, yes,
Speaker 1: alongside the sort of emergence of private, uh independent digital currencies,
Speaker 1: we have seen central banks all around the world do
Speaker 1: some efforts towards implementing their own or creating their own
Speaker 1: piloting projects of essentially having yeah, digital versions of cash.
Speaker 1: I guess, I guess you would say. And I think
Speaker 1: China is fairly far along with it's endeavored but I
Speaker 1: don't think any of them have really taken off yet,
Speaker 1: but definitely an area that I think a lot of
Speaker 1: people are pretty interested in for a lot of different
Speaker 1: policy And yeah, that's the thing is you wouldn't necessarily
Speaker 1: expect this to be the case, but a lot of
Speaker 1: the digital currency exploration that's going on right now is
Speaker 1: very closely tied to monetary policy. And I have to
Speaker 1: confess before we start, I have never entirely understood the
Speaker 1: concept of called central bank digital currencies. I've never quite
Speaker 1: understood what the problem central banks are trying to solve is,
Speaker 1: and I've never quite understood how they will function alongside
Speaker 1: traditional cash and bank reserves and things like that. But
Speaker 1: I'm happy to say I think we have the perfect
Speaker 1: person to discuss all of this today and to get
Speaker 1: into a lot of those themes. So we're gonna be
Speaker 1: talking with Ben Watt. Cray was of course on the
Speaker 1: board of the e c B from two thousand eleven
Speaker 1: to twenty nineteen, and he's now head of the Bank
Speaker 1: for International Settlements Innovation Hub, and that group recently published
Speaker 1: a report on cd d c s, part of a
Speaker 1: sort of task force that involved a bunch of central
Speaker 1: banks exploring this topic. So I think it's going to
Speaker 1: be a good conversation and hopefully it answers some of
Speaker 1: the questions that I, at least and probably a lot
Speaker 1: of other people have had about central bank digital currencies
Speaker 1: for some time. Yeah. No, I'm really excited because I'm
Speaker 1: with you in that um, I too have had numerous
Speaker 1: questions about what purpose they serve, what the central banks
Speaker 1: see as the reason for launching them. So hopefully we
Speaker 1: can get a lot of questions answered, and also hopefully,
Speaker 1: you know, maybe we could squeeze in a few questions
Speaker 1: about uh just the economy and monetary policy as well,
Speaker 1: because of course, Ben, while having served at the ECB
Speaker 1: for so long, hopefully we get some thoughts about the
Speaker 1: state of the world today, which of course still an
Speaker 1: extraordinary time. Yeah, and I think, weirdly there might be
Speaker 1: some natural overlap between two currencies and what's going on
Speaker 1: right now in the global economy. So, without further ado,
Speaker 1: Ben walk Curay, thank you so much for coming on
Speaker 1: all thoughts welcome. Thank you very much for having me
Speaker 1: so in the intro. Joe and I both just admitted
Speaker 1: to not necessarily understanding digital occurrencies from central banks, maybe
Speaker 1: just to begin with, you could sort of explain the concept.
Speaker 1: And maybe one thing that's always confused me is if
Speaker 1: we were to see something like a digital dollar or
Speaker 1: a digital euro, how would that differ two For instance,
Speaker 1: me holding a euro or a dollar in a traditional
Speaker 1: electronic bank account, what is it that makes that digital
Speaker 1: money different to you know, align in in my bank.
Speaker 1: So yeah, I mean, these are these are excellent questions
Speaker 1: because you may wander, I mean, we're living in a
Speaker 1: in the world which is already massively demateralized. Most of money,
Speaker 1: I mean more than money is already digital. So might
Speaker 1: wonder why why all of a sudden now we discussing
Speaker 1: digital currency. And so we're here to discuss central bound
Speaker 1: digital currency, right CBDC. And so let me focus on
Speaker 1: on the on the CB in CBDC, that is a
Speaker 1: definition of CBDC. It's money that is issued by the
Speaker 1: central bank, meaning it's a liability of the central bank. Um,
Speaker 1: it's not the liability of a commercial bank or any
Speaker 1: other player. It is digital, so it's not physical like
Speaker 1: bank notes, and it's not issued to bonks as part
Speaker 1: of monetary policy as we as we know it, which
Speaker 1: is as bank reserves. Right, So bank reserves is as
Speaker 1: if you think about it, it's money that bonks have
Speaker 1: on their account with the central bank. It is digital,
Speaker 1: so it is central bank digital currency and it has
Speaker 1: been existing for for decades. So here we're talking of
Speaker 1: any liability of the central bank which is digital but
Speaker 1: not issued to commercial bonks as part of the implementation
Speaker 1: of my type policy, which means to things. Either it
Speaker 1: is digital and issued directly to citizens, so it's a
Speaker 1: the equivalent digital equivalent of a bank note, and that
Speaker 1: would be entirely new. Or it is issued to commercial bonds,
Speaker 1: but not as a deposit on an account, but as
Speaker 1: a token for instance, which gives give the answer to
Speaker 1: your initial questions. So what's the what what the question?
Speaker 1: We are we're trying to answer what the problem statement? Well,
Speaker 1: there are two problems statements. The first one is what
Speaker 1: happens if cash disappears, if citizens don't want to use
Speaker 1: bank notes anymore, and how we happy if the only
Speaker 1: way they have to pay for their expenses consumption is
Speaker 1: to use commercial money money, should buy bonds to draw
Speaker 1: from their bank accounts? Or do we want to keep
Speaker 1: providing them with central bank money which today doesn't exist
Speaker 1: in a digital form, so that the first question and
Speaker 1: the second question is what happens if at the core
Speaker 1: of the system, banks or financial market infrastructures would need
Speaker 1: central mark money to set all the transactions in a
Speaker 1: way that is not an account at the central bank,
Speaker 1: and that could be a token for instance. So imagine
Speaker 1: a future, maybe a near future, where some financial market
Speaker 1: infrastructures would be um transacting exchanging tokens on on d
Speaker 1: l t s. Right, if you want to keep settling
Speaker 1: these transactions in central mark money, then you need a
Speaker 1: way to either connect the DALT with the traditional payment
Speaker 1: infrastructure or to issue a central bank token to the
Speaker 1: d LT And that's what we call wholesale CBDC. So
Speaker 1: there are two answers. Either it's whole sale CBDC because
Speaker 1: the technology underlying financial infrastructures is changing, or it's retail
Speaker 1: CBDC because in some places at least cash may be disappearing.
Speaker 1: So these are two separate questions at both ends of
Speaker 1: the financial system, at the front end and at the
Speaker 1: back end. First of all, that was very helpful, just
Speaker 1: sort of overview of what you're doing or what the
Speaker 1: vision is. I guess one way that I sort of
Speaker 1: think about it or here, what you're saying is, rather
Speaker 1: than seeing the analogy as Okay, here's a money. If
Speaker 1: I have it in a bank, it's a liability of
Speaker 1: a bank. If I have it in some sort of
Speaker 1: payment app like PayPal or Venmo, that dollar or that
Speaker 1: euro is a liability of PayPal or Venmo. This is
Speaker 1: more like cash, something that I hold in the wallet,
Speaker 1: and something that's a direct liability of the central bank.
Speaker 1: So that part makes sense to me. What is the
Speaker 1: fundamental advantage, however, of doing this? So we have cash
Speaker 1: that currently exists, we have online money or sort of
Speaker 1: bank liability money as you described it, What from a
Speaker 1: policy standpoint would in your view, the creation and widespread
Speaker 1: adoption of a digital euro or a digital dollar or
Speaker 1: a digital pound. What are the advantages that you see
Speaker 1: for governments and central banks to actually launch them. So
Speaker 1: my my answer, and that might might might be surprising
Speaker 1: coming from a central banker, but that my answer would
Speaker 1: be that it's not even a policy discussion. It is
Speaker 1: a political discussion. The key question here is are we
Speaker 1: satisfied if all money used by citizens for their daily
Speaker 1: transactions is commercial money? That is how we satisfied if
Speaker 1: the whole functioning, the daily functioning of the economy is
Speaker 1: a at the end of conversation between citizens and and banks,
Speaker 1: right or do we want the central bank as a
Speaker 1: public institution to be part of it? And what's very
Speaker 1: important here and also for the for the rest of
Speaker 1: our discussion, is that the answer might be different in
Speaker 1: different places. That is, in some places citizens may trust
Speaker 1: and in many places I guess citizens would trust the
Speaker 1: central bank better than visa, master card or Facebook or
Speaker 1: city bank. Right in other places or in other corners
Speaker 1: of societies, that might not be the case. And you
Speaker 1: will find many people who who trust city bank more
Speaker 1: better than the central bank, and you would you you
Speaker 1: find people who trust bitcoin more better than the dollars
Speaker 1: or the yero. And so the conclusion here is that
Speaker 1: we have to let to let people decide for themselves
Speaker 1: which kind of money they want to use, provided that
Speaker 1: they are well informed on the risks, on the on
Speaker 1: what on the implications. But the emerging consensus is that
Speaker 1: a substantial fraction of society will ask to keep that
Speaker 1: contact with the central bank, which is the ability to
Speaker 1: use a direct liability on a public institution under parliamentary
Speaker 1: supervision as part of a political system, and if we
Speaker 1: want to keep that kind of access, then we need
Speaker 1: to do CBDC. So that's really interesting because you've framed
Speaker 1: more direct contact between people and the central bank through
Speaker 1: cb dcs as an advantage or something desirable. But I
Speaker 1: know one of the criticisms of digital money is that
Speaker 1: there is a concern that you're in effect reduced in
Speaker 1: the role of commercial banks in the economy, and that
Speaker 1: might have unintended consequences for the transmission of monetary policy
Speaker 1: or the way the financial system actually works. Some people
Speaker 1: have talked about the potential to increase bank runs. For instance,
Speaker 1: if people have a central bank issued alternative that's seen
Speaker 1: as a safe place to park their money, they might
Speaker 1: fly fly out of bank deposits and and go into
Speaker 1: digital money. How are you thinking about about that particular issue,
Speaker 1: How are you thinking about how CBDC might impact the
Speaker 1: financial system as it exists today. So that's a that's
Speaker 1: a very important point, Tracy, And that's that's also why
Speaker 1: why I'm saying that we need an ecosystem right and contact.
Speaker 1: What what people sometimes hear or think the there is
Speaker 1: no intention by central bonds to to have a monopoly
Speaker 1: on all kinds of money. The economy is are operated
Speaker 1: with commercial money today or when you when you when
Speaker 1: you buy a beer in a bar, it's very very
Speaker 1: likely that you're going to pay either with a credit
Speaker 1: card or with a telephone, and that will be eventually
Speaker 1: coming from your bank account, and it's commercial money, that's
Speaker 1: not a claim on the central mark, and we're going
Speaker 1: to keep it like that, right, So so we'll we'll, we'll, we'll,
Speaker 1: we'll keep an ecosystem where you'll have different forms of
Speaker 1: different means of payments, different forms of money, and most
Speaker 1: of it will be commercial. The question is do we
Speaker 1: want to keep central mark money at the heart of
Speaker 1: the system to uh to to to make it stable? Right,
Speaker 1: And one of the of the key considerations that we
Speaker 1: we have in thinking about the future ecosystem is exactly
Speaker 1: what you mentioned, which is we don't want CBDC to
Speaker 1: to kill bonks, right. We don't want to go to
Speaker 1: the to the extreme of a system where all economic
Speaker 1: players would use CBDC um and bonds would at best
Speaker 1: be kinds of conduits would buy assets or extend credits
Speaker 1: and and fund on the on capital markets, you know,
Speaker 1: narrow banks or or a system of sovereign money at
Speaker 1: that it's sometimes called or in Switzerland had a vote,
Speaker 1: as you may remember, on some something called Folgal which
Speaker 1: was rejected. So that's people that that's something that most
Speaker 1: people don't runt, and that's something that regulators and sattle
Speaker 1: bankers don't runt because they see your value in the
Speaker 1: existence of commercial bonds as institution who take risk, who
Speaker 1: transform credit, who take maturity risk and credit risk uh
Speaker 1: and would do all kinds of financial intermediation in the economy.
Speaker 1: We don't want to kill that system. And so there
Speaker 1: is an active discussion on how to to mitigate the
Speaker 1: kind of risks your highlighting treacy, which is that CBDC
Speaker 1: would take over bank deposits and would would would make
Speaker 1: banks more vulnerable. And there are different answers. We can
Speaker 1: go into the details if you wish, And one of
Speaker 1: the of the important discussions will have in the coming
Speaker 1: months and years is what's the best answer if we
Speaker 1: don't want this to happen. I want to ask take
Speaker 1: it from the other angle. I mean, one of the
Speaker 1: nie things about cash as we know it. If I
Speaker 1: pay for something in the bar, if I you know,
Speaker 1: go out and meet up with friends and want to
Speaker 1: split a check somewhere or anything else. Is that it's
Speaker 1: anonymous person a or somewhat anonymous person A can pay
Speaker 1: something to person be without person ce knowing about it.
Speaker 1: And they are all kinds of reasons why people prize privacy.
Speaker 1: I'm curious if in your vision of a c B
Speaker 1: d C A, would two people be able to make
Speaker 1: a transaction without some third party entity having a sort
Speaker 1: of centralized knowledge about who just made that transaction. And
Speaker 1: I'm curious in your conversations around with regulators and central bankers,
Speaker 1: I'm sure you talked to a lot of different groups,
Speaker 1: law enforcement agencies about their concerns. Finn send you think
Speaker 1: about know your customer, anti monitor uh, anti money laundering laws,
Speaker 1: And I'm curious whether in your converse stations and consultations
Speaker 1: we've also talked to privacy groups about their concern So, UM, yeah,
Speaker 1: I mean we've been doing that in particular when last year, UM,
Speaker 1: there was a related discussion not on on CBDC, but
Speaker 1: on stable coins right um, start starting from liberal right um,
Speaker 1: And there has been an active discussion in policy circles
Speaker 1: on how to regulate stable coins and the FSB just
Speaker 1: came with a report on that with with guidelines on
Speaker 1: on a stable kind of regulation. And privacy is also
Speaker 1: a key, a key issue. And by the way, something
Speaker 1: we found out that financial regulators don't often talk to
Speaker 1: to privacy regulators or two privacy groups. And so that's uh,
Speaker 1: let's say, it might sound like a kind of an
Speaker 1: ancillary discussion, but it's actually very important that this this
Speaker 1: kind of technical innovation forces us to also to read
Speaker 1: things the way we we do regulation and to connect
Speaker 1: to connect silos right which which until recently weren't connected
Speaker 1: at all. And so and so we are talking now
Speaker 1: with privacy regulators and with privacy groups. And that's an
Speaker 1: instance of choices that have to make that have to
Speaker 1: be made by by society and and and through a
Speaker 1: political process. Because on the one hand, you have a demand,
Speaker 1: you have demand for privacy which is there and which
Speaker 1: is absolutely legitimate, and which is already in some places
Speaker 1: like Europe very much unshrined and had hard wired into
Speaker 1: lower with with with GDP are in particular. But on
Speaker 1: the other hand, you also have a regulation and and
Speaker 1: and and and laws against money wandering, against the financing
Speaker 1: of terrorism, etcetera, which are equally important, right, and so
Speaker 1: so any any CBDC architecture will have to strike a
Speaker 1: balance between these two aspirations and the exact the way
Speaker 1: we turn the dial. I imagine you should be a
Speaker 1: political discussion, because I I don't see how central bankers
Speaker 1: or bank supervisors could decide on on the on that
Speaker 1: kind of things. It has to be political discussion. And
Speaker 1: again there are ways to reconcile. So for instance, I'm
Speaker 1: just giving an example, so I'm not I'm not saying
Speaker 1: that's the way to go, but just to illustrate, you
Speaker 1: could imagine a system where CBDC would be distributed by banks. Right,
Speaker 1: so the front end would be banks. You would keep
Speaker 1: talking to your bank. You wouldn't you wouldn't go directly
Speaker 1: to the to the FED or the HKm, MAY or
Speaker 1: the or the E c B. You would get your
Speaker 1: CBDC from your bank, just as you get your bank
Speaker 1: notes from your A T M. So exactly the same
Speaker 1: as today. Banks would buy a given quantity of CBDC
Speaker 1: from the central Bank using their bank reserves, just as
Speaker 1: they buy bank knows today. And see, the central bank
Speaker 1: could regulate the amount of CBDC for monetary policy purposes,
Speaker 1: but the central bank would not know exactly to which
Speaker 1: CBDC has been distributed, and that would be subject to
Speaker 1: m L and c FT and and generally no customers
Speaker 1: diligence and I know your client client rules just as
Speaker 1: any transaction today. So that's a possible way that do
Speaker 1: reconcile different aspects. You mentioned Libra briefly, which is Facebook's
Speaker 1: attempt at a at a stable coin, and this sort
Speaker 1: of reminds me of of another big discussion when it
Speaker 1: comes to c b d C, and I guess part
Speaker 1: of it is that if you're going to launch digital money,
Speaker 1: even if you're a central bank, you're going to have
Speaker 1: to have some sort of payment system that goes along
Speaker 1: with it. And so central banks are going to have
Speaker 1: to decide whether to build and run their own payment
Speaker 1: systems or maybe to team up with companies in the
Speaker 1: private sector who can do that for them. I'm curious.
Speaker 1: Private corporations like Facebook are pretty good head technology. How
Speaker 1: do central bank compete against companies like that like a Facebook,
Speaker 1: or how do they work together with them for the
Speaker 1: payment system. So we shouldn't be competing against against Facebook
Speaker 1: because we are not in the same line of business right,
Speaker 1: we're absolutely not in the same line of business and
Speaker 1: and in the sense that's so if if I may
Speaker 1: take a step back, that's that's exactly why these um
Speaker 1: You mentioned the report which was issued by seven central
Speaker 1: banks together with the bis UM, and that's a working
Speaker 1: group I was culturing with a certainty from the Bank
Speaker 1: of England. It started exactly with the consideration that we
Speaker 1: we central bankers, have to come back to first principles
Speaker 1: UM and and too often the discussion on digital money
Speaker 1: digital currency UM started from the wrong place, like started
Speaker 1: from the technological end of the discussion. Are we going
Speaker 1: to do CBDC using blockchain? And if it's a blockchain,
Speaker 1: is that going to be corder or hyper ledger or
Speaker 1: whatever else, which is an important discussion in due time,
Speaker 1: but it's not it's not the right the right place
Speaker 1: to start from. We want to start from first principles.
Speaker 1: And as a central banker, I would say our job
Speaker 1: is to is twofold, is to ensure price stability or
Speaker 1: monetized stability, meaning that you should have the ways and
Speaker 1: means to implement your monetipe policy, whichever moneytype policy you've decided.
Speaker 1: As a as a Monetipe Policy Committee. That's the first thing,
Speaker 1: and CBDC should not hamper that. And if it can help,
Speaker 1: it's even better. We can discuss it later. And the
Speaker 1: second thing is financial stability. And an essential part of
Speaker 1: financial stability is the existence of core payment systems at
Speaker 1: the heart of the financial infrastructure, which connects financial institutions,
Speaker 1: which connect jurisdictions, and which a low real time settlement
Speaker 1: in central bank money. Right, and so the key role
Speaker 1: of the central banks really is at the heart of
Speaker 1: the system to provide stability. And we don't want to
Speaker 1: take over. And there are many many things, most things
Speaker 1: that we we won't we wouldn't do well and we're
Speaker 1: not going to do so. To give an obvious example,
Speaker 1: if CBDC comes as as a token, most likely is
Speaker 1: going to be handled in in wallets, right, So you
Speaker 1: would have a wallet on your phone, say with with
Speaker 1: CBDC with central bank tokens in it. That's not something
Speaker 1: central banks should be doing. It's it's very obvious to
Speaker 1: all of her. That's wallets are something for the private
Speaker 1: sector to do, right and so and so there there
Speaker 1: there is room for everyone. There is room for everyone.
Speaker 1: The key thing is any form of commercial money has
Speaker 1: to be regulated, right, and there there might be a
Speaker 1: financial stability considerations which would lead us to impose some
Speaker 1: requirements like settlement in central bank money. But apart from that,
Speaker 1: we need the private sector to innovate. All that innovation
Speaker 1: will come from the friend sector. I'm not I'm not
Speaker 1: aware that central bankers are particularly good that you know,
Speaker 1: at finding new technologies. That's not what we do. Okay,
Speaker 1: Can I ask you a question? I mean, you mentioned
Speaker 1: stable coins. We talked about Libra, and I think that
Speaker 1: there is a sort of spectrum of what we see
Speaker 1: in the stable coins space, from sort of extremely projects
Speaker 1: that attempt to be very uh legitimate Facebook as Facebook
Speaker 1: Libra is probably one of them, to others that are
Speaker 1: probably a little dice here. What is the regulatory case
Speaker 1: for the existence of stable clinates because central bankers regulators
Speaker 1: have been pretty permissive it seems of them for a while.
Speaker 1: And I'm curious why from your perspective they're beneficial and
Speaker 1: why uh sort of people should be able to use
Speaker 1: a currency on the distributed ledger somewhere that is ultimately
Speaker 1: backed up by a sort of licensed, licensed bank. Well,
Speaker 1: I wouldn't really see um stable coins as currencies, so
Speaker 1: it's it's a little bit of a misnomber um. I
Speaker 1: would see stable coins as um as new payment systems
Speaker 1: which are very well, very integrated, back to end, a
Speaker 1: close loop payment systems. So it's a it's it's a
Speaker 1: little bit different from the kind of innovation that we've
Speaker 1: seen until recently in the payment world, which was really
Speaker 1: at the front end, right, it was about, you know,
Speaker 1: providing you with a better interface, providing you with an
Speaker 1: interface on your smartphone and son and so forth, And
Speaker 1: all of a sudden we see payment architectures which are
Speaker 1: entirely private, which which are encompassing and go and include
Speaker 1: the the back end, that is the pipeline that will
Speaker 1: that will bring money from one place to another, right,
Speaker 1: which wasn't the case so far, and um, and that
Speaker 1: might be okay. That might be okay if it's well regulated,
Speaker 1: if consumers or investors are protected and know the risk
Speaker 1: the risks they are taking, that might be okay to
Speaker 1: have that kind of payment systems. I don't see I
Speaker 1: don't really see that as the currency. I think that
Speaker 1: as a new means of payment which can be convenient,
Speaker 1: but which also raised as risks. And these risks have
Speaker 1: been highlighted last year in the in the G seven
Speaker 1: report and stable coins and and uh and and recently
Speaker 1: by the by the FSB UM and the risks come
Speaker 1: from the fact that these new projects are are global.
Speaker 1: Liberal is an obvious example. And so there are risks
Speaker 1: to the for instance, to the to the functioning of
Speaker 1: the international monetized system which are entirely new, which you
Speaker 1: you didn't have with earlier forms of cryptocurrency. Like what
Speaker 1: happens if you have a major stable coin which is
Speaker 1: being issued and you start to see substitution with with
Speaker 1: local currency in some smaller jurisdiction. That would be a
Speaker 1: concern for that jurisdiction, would be a concerned for the
Speaker 1: I m F, would be a concern for the World Bank.
Speaker 1: And that's something that we want to discuss. So so
Speaker 1: you see new risks coming, right, But there is no
Speaker 1: reason why a priori stable coins should be h rejected
Speaker 1: and and and and and let me let me just
Speaker 1: as a just for for the record mentioned there are
Speaker 1: other forms of stable coin which hardly anyone speaks about,
Speaker 1: which are wholesale stable coins. Right, imagine a coin that
Speaker 1: would be issued by a by a large commercial bank
Speaker 1: to settle transaction within a few a small group of clients,
Speaker 1: and that would be backed by by central bank money.
Speaker 1: That's a stable coin. It's much less of a discussion
Speaker 1: because it's not going to reach billions of people, but
Speaker 1: only a handful of commercial banks. So that's pretty easy
Speaker 1: to to to understand and to regulate. But it's also coming.
Speaker 1: My understanding is that one of the big debates about
Speaker 1: digital money from central banks is whether it would strengthen
Speaker 1: the transmission of monetary policy. So, on the one hand,
Speaker 1: if you have CBDC, central banks can directly influence interest
Speaker 1: rates on digital money and they basically control it. But
Speaker 1: on the other hand, your as we discussed potentially setting
Speaker 1: up a competitor to bank deposits, and we're not exactly
Speaker 1: sure whether or not that might change the sensitivity of
Speaker 1: the demand for that type of money to interest rates.
Speaker 1: I be curious to get your views on is how
Speaker 1: do you see CBDC interacting with monetary policy. That's a
Speaker 1: really good question. It's a little bit the elephant in
Speaker 1: the room because that's a it's a really good question,
Speaker 1: and that's it's a it's a question that most central
Speaker 1: banks are working hard to not to answer and see,
Speaker 1: I take the report we've been we've been discussing. We
Speaker 1: we we kind of allude to that, but we are
Speaker 1: very early on the front. We say we're not going
Speaker 1: to discuss it, right. And there is a simple reason
Speaker 1: to that that, which is that monetary policy is a
Speaker 1: is a different mandate and it's it's it's very national,
Speaker 1: it's very domestic, and it's being decided in different places
Speaker 1: like I mean monetary policy committees, um, and so central
Speaker 1: bonds don't want to mix up the two discussions because
Speaker 1: if CBDC comes and the way they will use it
Speaker 1: for money type to do monetype policy is something that
Speaker 1: they want to decide for themselves. And so the case
Speaker 1: for international cooperation today is not on the monotype policy side.
Speaker 1: It's on the payment side, because we want the payment
Speaker 1: architecture to work smoothly and it is global, right uh.
Speaker 1: And this is why, this is why you already see
Speaker 1: and you're going to see a lot more international coordination
Speaker 1: on CBDC and on digital money generally because payments are
Speaker 1: the the backbone of the of the international financial architecture,
Speaker 1: and so you won't go to see coordination for the
Speaker 1: system to be stable. Well. Monetype policy is a sovereign matter,
Speaker 1: is decided locally people and and and governors want to
Speaker 1: talk to their and to report to their to their parliaments,
Speaker 1: right to US Congress, to the European Parliament, et cetera.
Speaker 1: That's not something they want to discuss in the open
Speaker 1: air and internationally. So so that was a little bit
Speaker 1: of a sociological or political you know, the tour to
Speaker 1: to to explain, to explain to you why we're not
Speaker 1: discussing it now. Of course, it is an issue. Of course,
Speaker 1: it is an issue that central banks will have to
Speaker 1: to decide for themselves. And I really see a key
Speaker 1: question coming for for each and every central bank to decide,
Speaker 1: which is do you want to do CBDC for monetary
Speaker 1: policy reasons or do you want to make it as
Speaker 1: neutral as possible on the way with respect to the
Speaker 1: way you implement your monetype policy. And that's a decision
Speaker 1: to take early on, because it impacts your architecture, It
Speaker 1: impacts the way you're going to do CBDC. Right, if
Speaker 1: you want CBDC to be accessed by your broad range
Speaker 1: of economic players and if you want to be able
Speaker 1: to control both the quantity and the price of that
Speaker 1: particular form of money, which is what monet type policy
Speaker 1: is about. Then it's different from deciding that you you're
Speaker 1: going to issue a given amount of CBDC and then
Speaker 1: you you don't want to know where it's going, for instance.
Speaker 1: And so there is a potential to use CBDC in
Speaker 1: a kind of tailor made way right in a kind
Speaker 1: of very very granular way to um to bring money
Speaker 1: to particular places, to uh to to to pump money
Speaker 1: down the last mile as a as my colleague I
Speaker 1: was in constance has has one said, that's that's that's
Speaker 1: something that today's Central Bank is very much want to
Speaker 1: see money being pumped down the last mile and and
Speaker 1: reaching all players, all corners of society. UM. But if
Speaker 1: you want to do CBDC to do that, then you
Speaker 1: probably have to to design your CBDC in a different way.
Speaker 1: And and Central Box have not decided yet really, so
Speaker 1: we're a little bit at a cross roads there, and
Speaker 1: different Central box may take different decisions. And so my
Speaker 1: person my personal take if you're which which doesn't commit anyone,
Speaker 1: and I'm not even doing money type policy because I'm
Speaker 1: had the bi s so it's it's really my personal
Speaker 1: view is that it is worth reflecting on that because
Speaker 1: we we're kind of at the end of a cycle
Speaker 1: where monetipe policy. We've made money type policy implementation incredibly
Speaker 1: sophisticated since the Great Financial Crisis and again now through
Speaker 1: the years of corner crisis. But most of it, if
Speaker 1: not all of it, he goes through capital markets, right,
Speaker 1: So we have very different sophisticated ways, complex ways to
Speaker 1: influence on capital, on financial market expectations, and on and
Speaker 1: and and on pumping money in and I out of
Speaker 1: capital markets. But at some point that's hitting the limits
Speaker 1: because our places in the economy where money just which
Speaker 1: money just cannot cannot reach. It also might create political
Speaker 1: issues because incredibly incredibly societies see monetype policy as being
Speaker 1: a conversation between central bonks and and capital market participants
Speaker 1: um and they feel excluded from that conversation. So that
Speaker 1: that was my my last word that the e c
Speaker 1: B last year, in my last speech in my last
Speaker 1: meeting at the ECB, the conclusion was that if if
Speaker 1: money type policy remains a conversation between central banks and
Speaker 1: capital markets, then we shouldn't be surprised if people don't
Speaker 1: trust us, right, And that's a little bit what we've seen.
Speaker 1: And CBC can be a way to reconnect central banks
Speaker 1: with with people if it's if he's done well. But
Speaker 1: some central banks might want to go there, so we
Speaker 1: don't want to go there, and that's fine. They're all different.
Speaker 1: I mean, this might be a good moment to sort
Speaker 1: of seg a little bit to some of the bigger
Speaker 1: policy questions that the world faces right now. But it
Speaker 1: seems to me like a point that you've made which
Speaker 1: I find really interesting, and a few of your answers
Speaker 1: is like a lot of these are just political questions,
Speaker 1: and political questions have to be made to some extent
Speaker 1: outside of the central bank. But I guess one of
Speaker 1: them is do we want monetary authorities to have the
Speaker 1: ability to more easily put buying power in the hands
Speaker 1: of normal people, not just functioned through capital markets. And
Speaker 1: it sounds like the sort of CBDC conversation that the
Speaker 1: world is having is sort of a parallel potential conversation
Speaker 1: to this question of do we want to expand the
Speaker 1: tools that central banks have to get people money? Yeah?
Speaker 1: I would, I would agree with that, And I mean
Speaker 1: the fact that there are political dimensions. So it doesn't
Speaker 1: imply that central banks should defer to two politicians, right CBDC.
Speaker 1: CBDC is about the future of money, it's about the
Speaker 1: future of multi policy, it's about the future of payments,
Speaker 1: and so central banks should be on on top of
Speaker 1: that discussion, which which which they are now. But what
Speaker 1: I guess what we're both saying is there are dimensions,
Speaker 1: there are some trade offs where you need to to
Speaker 1: get a sense of of the preferences of society. You
Speaker 1: need to you need to take the pulse of society.
Speaker 1: And that's why in all places CBDC will require um
Speaker 1: extensive consultations, which is the way the for instance, the
Speaker 1: Riggs Bank in in Stockholm has taken, which is always
Speaker 1: easy b now is taking. You need to consult a lot.
Speaker 1: That's not something that you want to do under closed
Speaker 1: door in a in a central somewhere. You that's something
Speaker 1: where many dimensions where which need their engagements with society
Speaker 1: at large. So I know there's been some discussion on
Speaker 1: potentially tearing interest rates when it comes to cb d
Speaker 1: C and and maybe even allowing the Central Bank to
Speaker 1: impose negative rates on digital money that they issue. That
Speaker 1: probably says more about where we are in terms of
Speaker 1: unconventional monetary policy as a whole than it does necessarily
Speaker 1: about c B d C. But maybe that should be
Speaker 1: a que too, to broaden the conversation and talk a
Speaker 1: little bit about what's going on in the world at
Speaker 1: the moment. I think when you were at the ECB,
Speaker 1: there was an assumption that monetary policy would eventually get
Speaker 1: back to normal, But it seems increasingly likely now that
Speaker 1: low interest rates and asset purchase programs, things like that
Speaker 1: are here to stay. Do you think we're ever going
Speaker 1: to get back to the days of boring central banking
Speaker 1: where we would never be talking about negative interest rates
Speaker 1: when it comes to CBDC. Yeah, well that's truely through
Speaker 1: that term. I'm now old enough that I remember the
Speaker 1: days where interest rates were positive. Le see, these were
Speaker 1: the good old days. And the year the Corona, the
Speaker 1: Corona crisis, the Corona shock as there has disrupted everything.
Speaker 1: So I think it's fair to her, it's fair to
Speaker 1: say that there is no prospect, there is no short
Speaker 1: term prospect of money typolicy normalization anytime soon because of
Speaker 1: the the amounts extraordinary amount of uncertainty that we have,
Speaker 1: which which comes from from outside the economy, which comes
Speaker 1: from the UM from the cycle of lockdowns and UH
Speaker 1: and and waves, etcetera. And so as long as we
Speaker 1: will have this kind of waves and uncertainty on lockdowns,
Speaker 1: there will be the economy will be in a state
Speaker 1: for very high fragility because UH expectations will because there
Speaker 1: is no way that they are that that that businesses
Speaker 1: or consumers can form expectations about the future, so that
Speaker 1: that that that kind of compresses the time horizon of
Speaker 1: of both businesses and consumers in a way that that
Speaker 1: makes it very very difficult to to plan for the
Speaker 1: long term, which is what central banks should be doing
Speaker 1: now in there. If you think of the kind of
Speaker 1: assignment of roles in the in the economic policymaking world,
Speaker 1: you would expect central bankers to care for the long term,
Speaker 1: while politicians are kind of prisoners of their of short
Speaker 1: term incentives and constraints and political cycles and underlike UM
Speaker 1: and you would like central bankers to think for the
Speaker 1: for the future. But today's count because it's just too uncertain.
Speaker 1: So it's very difficult to to UH to to to
Speaker 1: kind of make make plans about the future of my
Speaker 1: entire policy, and these I think the only year kind
Speaker 1: of a sensible conclusion is that central banks need my
Speaker 1: semum flexibility to to coop result kind of outcomes, So
Speaker 1: they need to keep to keep all their options open.
Speaker 1: So I mean, because of this sort of extraordinary moment,
Speaker 1: and you mentioned it, I think in one of your
Speaker 1: first answers were in an era in which they're sort
Speaker 1: of a perception but prior also reality that there really
Speaker 1: is only so much, so many tools at the central
Speaker 1: bank's disposal. Right now, we have more people talking about, okay,
Speaker 1: we need more aggressive fiscal policy across the developed world.
Speaker 1: Even the I m F has said as such a
Speaker 1: do you believe um that that is the case, that
Speaker 1: there is an argument for fiscal authorities to do more?
Speaker 1: But more importantly, do you think sort of going forward,
Speaker 1: and even as this crisis hopefully sort of phades into
Speaker 1: the rear view mirror, do you think it's worth a
Speaker 1: sort of broader rethink about a more permanent role for
Speaker 1: UH fiscal policy in terms of macro stabilization, such that
Speaker 1: we're not really depended on central banks to balance the economy.
Speaker 1: Every time, you know, things things go bad, it's there.
Speaker 1: It's a pity that you would need their global pandemics
Speaker 1: to to have that discussion, right, I mean, I mean
Speaker 1: it has started a little bit before, but it does
Speaker 1: feel as though the pandemic has accelerated the discussion of nothing. Yeah,
Speaker 1: I mean that there are there are I think the discussion.
Speaker 1: I mean it it looks different in different places, and
Speaker 1: we're thinking there. In the US, you have a very
Speaker 1: decent tradition of stabilization policies, both on the monetary side
Speaker 1: and on the fiscal side, and of a good, good
Speaker 1: complimentarity between monetary policy and fiscal policy, and the economy
Speaker 1: is flexible and resilient and strong enough that you you
Speaker 1: can stay in that mode, right, because the economy always
Speaker 1: comes back, and so you're not stuck in a state
Speaker 1: of the world where you would have to to do
Speaker 1: a very active monetype policy and very active fiscal policy
Speaker 1: at the same time, because the economy it comes back. Right.
Speaker 1: It's more difficult in Europe for different reasons, one reason
Speaker 1: being that we've we've never been able so I say
Speaker 1: we as a European right, uh now, we've never been
Speaker 1: able to find the right fiscal framework, and so fiscal
Speaker 1: policy has never been has never been very helpful in
Speaker 1: helping the ECB manager cycle, and it's becoming more helpful now.
Speaker 1: And you've discussed it with with my former colleague of
Speaker 1: it or Constanzo, and I agree with with a lot
Speaker 1: of what what he told you that is now happening,
Speaker 1: and it's a it's a very good development. But the
Speaker 1: other reason is that the economy is in Europe is
Speaker 1: not nearly as flexible than the US. So if you're
Speaker 1: into that kind of of extraordinary situation where you need
Speaker 1: to to turn the dial and and have a very
Speaker 1: active type policy and fiscal policy at the same time,
Speaker 1: because the economy is not responding, you don't know how
Speaker 1: much how how much time it will come to go
Speaker 1: back to normal, right, because the economy is not facile
Speaker 1: bab enough to do it by itself. So that's that's
Speaker 1: a different situation, which also calls for a little bit
Speaker 1: of caution, right because you can be stuck there in
Speaker 1: that kind of in that kind of state of the
Speaker 1: world for much longer. And so so far, so good.
Speaker 1: I mean, the what what what fiscal authorities and my
Speaker 1: entire authorities have done so far is exactly what you
Speaker 1: were suggesting, And what what you what we want to
Speaker 1: see that is good complimentarity between my entire policy and
Speaker 1: fiscal policy. Even in emerging markets economy is by the way,
Speaker 1: you are now seeing some I mean many emerging market
Speaker 1: economies UM doing quee and the government is issuing more
Speaker 1: domestic depth I mean domestic currency, the nominated depth, which
Speaker 1: is santral banc and partly buy UM and that's the
Speaker 1: way to kind of strengthen the complimentarity between my Thai
Speaker 1: policy and fiscal policy, and that has given them much
Speaker 1: more policy space. So you're seeing that happening in different places.
Speaker 1: The question is what happens if that is that a
Speaker 1: situation that can last for many years, because then depth
Speaker 1: public depth will be building up. Private depth will be
Speaker 1: building up as well. Some of it will be transferred
Speaker 1: onto the balance sheet of the government UM and at
Speaker 1: some point, whatever the efforts of the central bank, the
Speaker 1: depth will be will be will be so high that
Speaker 1: you will need some kind of rescheduling or restructuring. UH.
Speaker 1: And so if if if the situation with the virus
Speaker 1: states as it is for a number of for another
Speaker 1: a few years, which of course nobody nobody hopes what
Speaker 1: today looks like good corporation between moneti policy and fiscal
Speaker 1: policy and and respectful of everyone's mandate right, not not
Speaker 1: harmful to the independence of central banks. That's something that
Speaker 1: that would become much more difficult to sustain because you
Speaker 1: will have to start discussions on some some ways to
Speaker 1: to to share the fiscal burden. And these discussions can
Speaker 1: be politically very difficult and very harmful. And and it's
Speaker 1: already starting in the in the developing world. I mean,
Speaker 1: there is an a discussion on depth restructuring and depth
Speaker 1: depth initiatives in the in the developing world. M if
Speaker 1: we stay there for a few more years, that will
Speaker 1: gradually come to the developed world, and that will that
Speaker 1: will come with huge political difficulties. So um, I guess
Speaker 1: the only conclusion is that you want to you want
Speaker 1: a vaccine to be found very quickly. That's a conclusion.
Speaker 1: I think we can all agree with that. Definitely, we
Speaker 1: all agree with that. Yeah, you mentioned the interview we
Speaker 1: did with your former colleague bitour Constantio, and one of
Speaker 1: the things that came up quite a bit in that
Speaker 1: conversation was inflation or the lack thereof. Rather than ask
Speaker 1: you the same question that we ask bitore, which is
Speaker 1: do central banks understand inflation? I want to ask a
Speaker 1: slightly different one, which is, why do you think that
Speaker 1: consumers or the average person's perception of inflation seems to
Speaker 1: differ from what central banks are looking at? And I
Speaker 1: think there's a stat out there that um, according to
Speaker 1: European Commission Survey, households thought annual inflation was something like
Speaker 1: nine percent between two thousand four and whereas we all
Speaker 1: know having this conversation now, that inflation was actually below
Speaker 1: the two percent target and quite far below it. So
Speaker 1: where do you think that discrepancy is actually coming from, Well,
Speaker 1: it comes from there. The way statisticians and central and
Speaker 1: central bankers look at inflation is a is very is
Speaker 1: from a southern feet right. It's a bird's eye view
Speaker 1: on everything that's going on into the economy across social groups,
Speaker 1: across age groups, across different places. And it's so it
Speaker 1: totally kind of ignores the diversity of consumption habits, um
Speaker 1: and the and also the fact that you buy different
Speaker 1: different goods and services at different frequencies over time. So
Speaker 1: individuals are are biased towards overweighting goods and services that
Speaker 1: they buy very often like like obviously, I mean food
Speaker 1: and dairy and and transports and and and refueling your
Speaker 1: car and that kind of things, while and the price
Speaker 1: of her of smartphones might be collapsing. I mean, that's
Speaker 1: not something you buy very often. So when people ask you,
Speaker 1: come and ask you about inflation, you're not going to
Speaker 1: think about that. So there are huge cognitive biases which
Speaker 1: which are which are just normal, and central banks have
Speaker 1: not really made the effort to kind of translate their
Speaker 1: concepts into concepts that people can relate to. And I
Speaker 1: think that's a big challenge for the future. That central
Speaker 1: banks are absolutely right to to look at the economy
Speaker 1: in the aggregate at a at an aggregate level, but
Speaker 1: when they when they when they formulate their policies and
Speaker 1: they're and their targets are in terms of inflation, they've
Speaker 1: got to translate it in a way that people can understand.
Speaker 1: And we're not doing that, you know, Without getting too
Speaker 1: much into specific actions being taken by major central banks
Speaker 1: right now, you know, I want to just talk a
Speaker 1: little bit more about this sort of intellectual landscape, and
Speaker 1: we see this movement towards um policies or frameworks that
Speaker 1: seek to avoid past mistakes and the FED is engaging
Speaker 1: or and now it's the new framework of average inflation
Speaker 1: targeting UM combined with a sort of more robust forward guidance.
Speaker 1: You've done a lot of work on these types of things,
Speaker 1: uh in your career. Do you see this as evolution
Speaker 1: average inflation targeting to avoid premature hikes in the future.
Speaker 1: And do you think there's more that central banks can
Speaker 1: do with sort of state contingent for for guidance, very
Speaker 1: clear levels that they set before which they would consider
Speaker 1: hiking raids or do you think the sort of current
Speaker 1: or they sort of I guess at the state of
Speaker 1: the art, so to speak, in terms of what can
Speaker 1: be under this tour. Yeah. Look, look, I don't want
Speaker 1: to I don't want to comment on specific decisions by
Speaker 1: specific central banks. UM. I mean you can you can
Speaker 1: put very sophisticated words and concepts on that. I think
Speaker 1: at the end of the day, or it's a lot
Speaker 1: of what is being done today in different places amounts
Speaker 1: to just making sure that you will have maximum flexibility
Speaker 1: to cope with with economic uncertainty and as you said, UM,
Speaker 1: kind of firm tilting the discussion so that you're on
Speaker 1: the right side of the discussion, and you prefer you
Speaker 1: don't want to take the risk of having even lower inflation,
Speaker 1: given that you're at or close to the lower abound
Speaker 1: in terms of your interest rates um and and given
Speaker 1: the the harmful the harmful con sequencers of deflation for
Speaker 1: the economy, So you want to be in terms of
Speaker 1: risk management, right, you want to be on the right
Speaker 1: side of that of that risk. And if you if
Speaker 1: you're going to take a chance, that would be the
Speaker 1: chance of higher inflation, because then you know what to do.
Speaker 1: That's how I understand what they're all saying, right, And
Speaker 1: then you can put very fancy concepts on it, which
Speaker 1: is which is fine. But as long as you as
Speaker 1: the outcome is that you keep a lot of flexibility
Speaker 1: and you are on the side of caution in terms
Speaker 1: of not allowing a deflation to happen, I think that's fine.
Speaker 1: And I don't think the exact framework matters matters too much,
Speaker 1: all right, Well, Ben, what I really enjoyed that conversation,
Speaker 1: and I feel like I actually have a, let's say,
Speaker 1: the start of a good understanding of central bank digital currencies.
Speaker 1: You did a really good job of framing the discussion.
Speaker 1: So thank you so much. Okay, very good. So I
Speaker 1: hope now you know why we are why we're doing it,
Speaker 1: definitely more than before. Thanks. That was great. Thank so.
Speaker 1: I found that conversation very very interesting, And one thing
Speaker 1: that I did appreciate was Ben was framing of a
Speaker 1: lot of these issues or debates not as technological problems,
Speaker 1: but as political problems or political issues that need to
Speaker 1: be decided by governments. Yes, I think to me that
Speaker 1: was like the big takeaway too. So there's obviously the
Speaker 1: technological side that's interesting. There are some exciting things that
Speaker 1: can theoretically follow from the technological innovations, whether it's advances
Speaker 1: and payments, the ability for people to engage in finance
Speaker 1: outside of just um sort of interface with commercial banks.
Speaker 1: But it does feel like these are all sort of
Speaker 1: the big questions are still have to be fought over politically,
Speaker 1: how any country actually wants to set these up, and
Speaker 1: the parameters of digital currency. Yeah, and I think that's
Speaker 1: another thing that came through from the conversation, the idea
Speaker 1: that not every cb d C is going to look
Speaker 1: the same, and countries might have different things or different
Speaker 1: problems that they're actually looking to solve when they issue
Speaker 1: these and for instance, you brought up the discussion about privacy.
Speaker 1: There might be certain countries in the world, you know,
Speaker 1: I don't know, the Cayman Islands, Bermuda, places like that
Speaker 1: where anonymity of central bank digital money could work and
Speaker 1: could even be valued. Um, but that might not not
Speaker 1: necessarily be the case in other parts of the world. Yeah,
Speaker 1: I mean, I think this is the question of anonymity
Speaker 1: is super important because look, that is a really important
Speaker 1: aspect of cash, right, Like people like cash for that reason,
Speaker 1: but cash is going away. It's being used less and
Speaker 1: less because a you know, we have our phones and
Speaker 1: there's all kinds of sort of digital money infrastructure out
Speaker 1: in the wild, but also just on the internet, there
Speaker 1: is no way to spend cash. And so the question
Speaker 1: is if there's a if we if we transport sort
Speaker 1: of the concept of cash to the internet and such
Speaker 1: that I can pay you for something directly without us
Speaker 1: having to use a commercial bank, do I get to
Speaker 1: keep what is a pretty fundamental characteristic of cash, which
Speaker 1: is that privacy? And if not, I think that's like
Speaker 1: a potentially sort of a loss and a worrisome thing
Speaker 1: for sort of civil liberties and rights. If that goes away.
Speaker 1: You know, one thing that never ceases to amaze me,
Speaker 1: and I was thinking about during that conversation is just
Speaker 1: how many different types of money there actually are. And
Speaker 1: people say money, but of course, yeah, you know, there's
Speaker 1: so many variations. There's the sort of commercial back end
Speaker 1: money that been always talking about a lot um, there's
Speaker 1: obviously cash, and I don't know, like, I don't know
Speaker 1: what I'm trying to say, but it's it's just remarkable.
Speaker 1: You know. What I think is what I always think
Speaker 1: about is interesting, is that like when people think of money,
Speaker 1: like when they think of like a dollar or a euro,
Speaker 1: I think the first thing that usually comes to mind
Speaker 1: is the physical version. But I realized what I've like
Speaker 1: sort of like come to appreciate over the years is
Speaker 1: the physical version is like the weird freak show thing
Speaker 1: that doesn't really fit into anything else, so we tend
Speaker 1: to they're not the same. And you know, like the
Speaker 1: physical money, the cash that we have like in our pocket,
Speaker 1: that's like this like narrow slice of the money system.
Speaker 1: It doesn't even really make sense. Most money is credit,
Speaker 1: but it's not it's the direct liability of the central bank.
Speaker 1: But that's also strange, because what does it mean to
Speaker 1: be a liability all the other forms of money, whether
Speaker 1: it's the money that I have in bank, whether it's
Speaker 1: the money that I have in penmo, whether it's the
Speaker 1: money that banks have held at the central bank at
Speaker 1: the foot of reserve, that all sort of like fits
Speaker 1: into like this sort of like nice sort of like
Speaker 1: framework of like credit money that is essentially the core
Speaker 1: of the system. And so the money that most people
Speaker 1: think of is like the weird exception and not the
Speaker 1: rule at all. Yeah, I think when you think about
Speaker 1: it that way, the discussions around cd DC make a
Speaker 1: lot more sense, like why central banks would be trying
Speaker 1: to solve the problem basically of cash being such a
Speaker 1: weird thing and serving such a unique role, a unique
Speaker 1: all be a changing role in society, you know. The
Speaker 1: The other thing is, like we talked about privacy. I mean,
Speaker 1: there are some people who are like really see the
Speaker 1: privacy aspects of cash to be a super negative. I mean, like, uh,
Speaker 1: who is it that um can rogue off? I mean
Speaker 1: he wrote a book basically about how awful cash is,
Speaker 1: how it facilitates crime and tax evasion and corruption other
Speaker 1: and stuff. So while there are some people who are like, okay,
Speaker 1: online digital currencies may solve the problem of anonymous payments
Speaker 1: on the internet in the world without cash. Other people
Speaker 1: will say, like, this is really exciting because we can
Speaker 1: get rid of cash and then there's no more anonymous
Speaker 1: payments anymore than we can go against all these ills
Speaker 1: like drug dealing and money laundering and stuff like that.
Speaker 1: So some people see this as a huge opportunity to
Speaker 1: fix what they see is one of the major flaws
Speaker 1: of money right now. I mean. Other people argue also
Speaker 1: that there are less harmful forms of digital cash already
Speaker 1: in existence, such as gift cards issued by Visa and
Speaker 1: MasterCard things like that. Um, okay. Well, clearly there's a
Speaker 1: lot to unpack when it comes to the very nature
Speaker 1: of money, and we will of course keep talking about
Speaker 1: it on All Thoughts. It's a perennial favorite of ours.
Speaker 1: But for now, should we leave it there? Let's save
Speaker 1: it there. This has been another episode of the All
Speaker 1: Thoughts podcast. I'm Tracy Alloway. You can follow me on
Speaker 1: Twitter at tre See All the Way, and I'm Joe
Speaker 1: Wisn't Though. You can follow me at the Stalwart and
Speaker 1: follow our guest Benay on Twitter he's at B Currey.
Speaker 1: Follow our producer Laura Carlson. She's at Laura M. Carlton.
Speaker 1: Follow the Bloomberg had of a podcast francesco Leavi at
Speaker 1: Francesca Today, and check out all of our podcasts under
Speaker 1: the handle at podcast Thanks for listening.