1. Central Bank Digital Currencies: An Old Tale with a New Chapter
- Author
-
Bordo, Michael D. and Roberds, William
- Subjects
United Kingdom. Bank of England ,Sweden. Central Bank of Sweden ,Cambridge University Press ,Book publishing ,Central banks ,Private banking ,Banking, finance and accounting industries ,Business - Abstract
We consider the debut of a new monetary instrument, central bank digital currencies (CBDCs). Drawing on examples from monetary history, we argue that a successful monetary transformation must combine microeconomic efficiency with macroeconomic credibility. A paradoxical feature of these transformations is that success in the micro dimension can encourage macro failure. Overcoming this paradox may require politically uncomfortable compromises. We propose that such compromises will be necessary for the success of CBDCs. JEL classification: E42, E58, N10 Key words: monetary systems, banknotes, central banks, digital currencies, Every year a new cohort of economists begins their professional careers with a trip into a fantasy land, one more unlikely than anything Walt Disney ever imagined. In this make-believe [...]
- Published
- 2022
- Full Text
- View/download PDF