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11. Financial Freedom and Privacy in the Post‐​Cash World

Author:
Alex Gladstein
Publication Date:
06-2021
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
The future of currency is digital. The majority of transactions made every day are already electronic and controlled by banks or tech companies. These payments are easily surveillable, confiscatable, and censorable. Physical cash still functions as an essential savings mechanism and privacy tool for millions of people worldwide. With cash, individuals can buy goods and services or save without sharing their identity with a third‐​party merchant or custodian. But as banknotes fade from daily use, the future of financial freedom and privacy comes into serious jeopardy.
Topic:
Finance, Privacy, Freedom, Digital Currency, and Cash
Political Geography:
Global Focus

12. The Case for Central Bank Digital Currencies

Author:
Eswar S. Prasad
Publication Date:
06-2021
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
New financial technologies — including those underpinning cryptocurrencies such as bitcoin — herald broader access to the financial system, quicker and more easily verifiable settlement of transactions and payments, and lower transaction costs. Domestic and cross‐​border payment systems are on the threshold of major transformation, with significant gains in speed and lowering of transaction costs on the horizon. The efficiency gains in normal times from having decentralized payment and settlement systems needs to be balanced against their potential technological vulnerabilities and the repercussions of loss of confidence during periods of financial stress.
Topic:
Science and Technology, Finance, Central Bank, and Digital Currency
Political Geography:
Global Focus

13. Should the State or the Market Provide Digital Currency?

Author:
Lawrence H. White
Publication Date:
06-2021
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
Private commercial banks have been providing trusted money to the public for hundreds of years, in the form of banknotes (where allowed) and transferable deposit balances, as an integral part of their business model. Economically, money balances are a private good: they are rival in consumption (you and I can’t both simultaneously spend a given banknote or deposit balance) and excludable in supply (you and your bank can stop me from spending the funds in your wallet or account) (White 1999: 89). Accordingly, the market does not inherently fail to provide money efficiently.
Topic:
Markets, Monetary Policy, Economy, State, Banks, and Digital Currency
Political Geography:
Global Focus

14. Technology Development of Digital Currency

Author:
Neha Narula
Publication Date:
06-2021
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
We often spend a lot of time talking about the regulatory aspects of what a digital currency might look like, or the economic aspects. But if we take a look at the largest companies, the most influential on our ways of life, they’re tech companies. Technology is incredibly important and influences what we can do with policy and what kinds of functionality we can even enable. So, what I hope to tell you today is a little bit about how I’m seeing the technology development of digital currency.
Topic:
Development, Science and Technology, Monetary Policy, and Digital Currency
Political Geography:
Global Focus

15. Public and Private Money Can Coexist in the Digital Age

Author:
Tobias Adrian and Tommaso Mancini-Griffoli
Publication Date:
06-2021
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
a card, waving a phone, or clicking a mouse. Or we might hand over notes and coins, though in many countries increasingly less often. Today’s world is characterized by a dual monetary system, involving privately issued money — by banks of all types, telecom companies, or specialized payment providers — built upon a foundation of publicly issued money — by central banks. While not perfect, this system offers significant advantages, including innovation and product diversity, mostly provided by the private sector, and stability and efficiency, ensured by the public sector. These objectives — innovation and diversity on the one hand, and stability and efficiency on the other — are related. More of one usually means less of the other. A tradeoff exists that countries — central banks especially — have to navigate. How much of the private sector to rely upon, versus how much to innovate themselves? Much depends on preferences, available technology, and the efficiency of regulation. So it is natural, when a new technology emerges, to ask how today’s dual monetary system will evolve. If digitalized cash — called central bank digital currency — does emerge, will it displace privately issued money or allow it to flourish? The first is always possible, by way of more stringent regulation. We argue that the second remains possible, by extending the logic of today’s dual monetary system. Importantly, central banks should not face a choice between either offering central bank digital currency, or encouraging the private sector to provide its own digital variant. The two can coincide and complement each other — to the extent central banks make certain design choices and refresh their regulatory frameworks.
Topic:
Monetary Policy, Banks, Money, Digital Policy, and Digital Currency
Political Geography:
Global Focus

16. Designing and Regulating Retail Digital Currencies

Author:
Steven L. Schwarcz
Publication Date:
09-2021
Content Type:
Policy Brief
Institution:
Centre for International Governance Innovation (CIGI)
Abstract:
Governments and multinational organizations are exploring the feasibility of developing “retail” digital currencies, sponsored by governmental central banks or privately issued, which consumers could use on a day-to-day basis as an alternative to cash. Central bank digital currencies could be either account-based or token-based. Privately issued digital currencies would likely be token-based. Private issuers are focusing on “stablecoins,” which are digital currencies backed by assets having intrinsic value. Retail digital currencies raise new regulatory issues in addition to those typically associated with money and payment systems. The most successful retail digital currencies are likely to be used not only domestically but also in cross-border transactions, which can be costly. They therefore should be designed, regulated and supervised to reduce these costs and, ideally, also to increase consumer accessibility — and thus to broaden financial inclusion.
Topic:
International Cooperation, Currency, Innovation, Cryptocurrencies, and Digital Currency
Political Geography:
Global Focus

17. Central Bank Digital Currency and Governance: Fit for Purpose?

Author:
Pierre Siklos
Publication Date:
04-2021
Content Type:
Working Paper
Institution:
Centre for International Governance Innovation (CIGI)
Abstract:
As digital forms of payment become increasingly popular, especially during the COVID-19 pandemic, cash is no longer king. Central banks are turning their attention toward central bank digital currency (CBDC) to replace coins and bills and to provide other types of services through digital technology. CBDC can also facilitate cross-border transactions through the use of internationally accepted currencies such as the euro and the US dollar. This paper explores the many tailwinds and headwinds that will affect the implementation of a CBDC.
Topic:
Governance, Digital Economy, Banks, and Digital Currency
Political Geography:
North America, Global Focus, and United States of America