Digital Currency
Retaining or Overcoming the Bankmoney Regime?
Design principles that make the difference

 Picture faz.net

Picture faz.net

Monetary reformers as well as central bankers are thinking about the introduction of sovereign money in the form of digital currency in coexistence with bankmoney. The paper linked to below discusses the advantages, problems and false problems of that approach and, most importantly, the design principles that decide on whether digital currency, rather than maintaining the present bankmoney regime, opens up the perspective of a gradual shift towards a sovereign money system.
Continue reading > Digital Currency 
Print out the paper as a PDF >  

 Picture internat.Movement monetary reform

Picture internat.Movement monetary reform

The Economist also makes the case for offering central bank accounts to everyone, 26 May 2018, 70.

• In accordance with the concept of sovereign money accounts, Ben Dyson and Graham Hodgson (Positive Money, London) have detailed a plan for Digital Cash. Why Central Banks Should Start Issuing Electronic Money > 

• In an article in the real-world economics review, no.68, 2014, Trond Andresen explained a concept of Electronic Sovereign Money Accounts (ESMA), a system of purely electronic payments that might help to make the transition from bankmoney to sovereign money >   

Dirk Niepelt, Study Center Gerzensee of the Swiss National Bank, has repeatedly argued in favour of sovereign money-on-account side by side with bankmoney > Reserves for everyone. Keep cash, let the public hold central bank reserves, VOX Policy Portal, 21 Jan 2015. 

_________________

Contributions to digital currency built on distributed ledgers by scholars from the International Monetary Reform Movement include the following:

Edgar Wortmann Foto.jpg

• Edgar Wortmann (Ons Geld, Netherlands) makes the case for migration to a sovereign money system based on digital cash:
The virtual euro >  

A working paper on the subject:   
Deleverage without a crunch > 

 Yokei Y.

Yokei Y.

 Kaoru Y.

Kaoru Y.

Yokei Yamaguchi and Kaoru Yamaguchi have contributed a plan for a Peer-to-Peer Public Money System >  

As a follow-up by K. Yamaguchi  Public Money, Debt Money and Blockchain-based Money Classified, Japan Future Research Council, Working Paper No.01-2017.  

FED refuses cooperation for setting up currency accounts

Since 2013 we have been promoting the idea of introducing accounts for the public use of central bank money-on-account (digital currency). Now an American ex central banker has taken the initiative, but, as the Sep/Oct 2018 IMMR newsletter reports,
The Narrow Bank with secure accounts denied by FED

James McAndrews, a former US Federal Reserve (FED) employee, has founded TNB Bank (TheNarrowBank). The idea behind it: All customer funds are deposited as a reserve directly with the FED. Thus, firstly they are secured against bankruptcy and secondly, the interest on FED bank reserves (1,95%) is currently much higher than market rates. This would allow customers high interest rates despite a risk-free investment of their money. The concept would indirectly allow for safe depositing of money in a style similar to "digital cash" but unfortunately, the banks business model is focusing on big financial institutions (making the playground even more uneven). However, so far the FED refused to grant the TNB bank access to its payment system.
Some articles on the matter:

Safe deposits by 100%-banking

 Thomas Mayer, FAZ

Thomas Mayer, FAZ

Among those who have been making the case for 100% individually backed- up deposits is Thomas Mayer, Senior Fellow at the Center for Financial Studies, Frankfurt, and former chief economist of Deutsche Bank
> A Copernican Turn in Banking Union Urgently Needed, CEPS Policy Brief, No. 297, July 2013.
Also cf. > Banish fractional reserve banking for real reform, Financial Times, 24 June 2013; re-published at Thomas Attwood Blog, 24 June 2013> Banish fractional reserve banking for real reform.

Sovereign Currency on Account

Logo Sveriges Riksbanken.jpg

The Swedish central bank (Riksbanken) has published a report on the introduction of digital or electronic cash called e-krona. This is deemed urgent all the more as traditional solid cash is bound to disappear in a not so distant future. E-krona is about a new kind of money account with direct transfer of balances, nothing short of a sovereign money account, along with e-cashcard and app. E-krona constitutes a new money circuit of its own, separate from and in addition to the circulation of solid cash and the split circuit of public circulation of bankmoney (sight deposits) and interbank circulation of central bank reserves. E-krona enables the use of electronic central bank money in public circulation. Finance speak would say, e-krona is about opening the central bank balance sheet to nonbanks.   
Here is a press release by Riksbanken  > This is what an e-krona could look like
Here is the 40 pages report in full  > The riksbank's e-krona project, Sep 2017.    

With this, the Sverige Riksbank makes clear that it is serious about its announcement from autumn 2016:  
Riksbanken is definitely poised to come up with a digital currency scheme within two years > Sweden's Riksbank eyes digital currency, Financial Times, 15 Sep 2016.  
Lars Alaeus, Samuel Orrefur, Spencer Veale > Sweden's central bank to consider implementing digital cash, 30 Nov 2016. 
• Stefan Ingves, Governor of the Riksbank, rhetorically asks > Do we need an e-krona? , 8 Dec 2017.  
Business Insider Nordic, 20 Sep 2017, just learned five key features of the Swedish e-krona >   
N. Haering in Handelsblatt Global > Sweden's Big Digital Currency Idea, 1 Nov 2017.
• Uruguay to issue digital 'peso tickets', Bitcoin.com News, Nov 5, 2017.

Lars Alaeus from Positiva Pengar, Sweden, while supporting approaches like the e-krona, would prefer to see digital currency issued by way of a citizens’ dividend decided upon by the central bank, so as to shield money creation from any political influence > Value of money & making monetary reform apolitical.

 Ben Dyson

Ben Dyson

A quasi neighbouring approach comes from Bank of England staff Ben Dyson and Jack Meaning, Would a Central Bank digital Currency disrupt monetary policy? Bank Underground, 30 May 2018.

Here the latest working paper by Michael Kumhof und Clare Noone, Central Bank Digital Currencies. Design principles and balance sheet implications, Staff Working Paper No.725, Bank of England, May 2018. 

• In an article in the real-world economics review, no.68, 2014, Trond Andresen explained a concept of Electronic Sovereign Money Accounts (ESMA), a system of purely electronic payments that might help to make the transition from bankmoney to sovereign money >   

Sovereign Cryptocurrency  

A Role for central-bank issued Euro Cryptocash? by Ruth Wandhoefer, FinExtra, Dec 2, 2017 

The Governor of the Bank of England, Mark Carney, had announced in June 2016 to extend access to the BoE's payment system to non-bank payment service providers. What sounded then like a plan to introduce sovereign money accounts in public circulation was specified soon after as Central Bank Digital Currency (CBDC). Even though the technical form of CBDC was left open, the indications came down to a variety of a central bank-fed distributed ledger. In the meantime, the project has been deprioritised. Independently, the papers by Barrdear/Kumhof und Broadbent, as linked below, remain basic reading.
> Progress update on the Bank’s blueprint for a new RTGS system, Bank of England, June 2016.
> UK banks to lose their status as gatekeepers to the payment system, Positive Money

Michael Kumhof on Central Bank Issued Digital Currency

The approach to a digital currency under control of central banks is explained and modelled in a BoE working paper by
J. Barrdear and M. Kumhof > The macroeconomics of central bank issued digital currencies, July 2016.
Prior to this, Ben Broadbent had discussed the possibility of introducing a central-bank digital currency
> Central banks and digital currencies, Bank of England, 2 March 2016,  as a PDF> 

Estonia going for Estcoin?  Estonia tests water for own virtual currency >  EUobserver, 24 Aug 2017 - which is particularly interesting in that Estonia is a euro member state.

IMF logo.png

• IMF director Christine Lagarde ponders the issuance of Special Drawing Rights as an IMF cryptocurrency to complement or even replace existing reserve currencies > IMF Chief Suggests IMFCoin as possibility, Investopedia, 7 Oct 2017. 

The Bank for International Settlements, Basel, makes the case for central bank issued digital cash, the more so as traditional solid cash is bound to disappear > Central bank cryptocurrencies, by Morten Becht/Rodney Garratt, BIS Quarterly Review, Sep 2017, 55-70. 
Two years before, the Basel Bank had released a first report in favour of
> central bank issued digital currency, 23 Nov 2015.

 David Andolfatto

David Andolfatto

David Andolfatto, Vice President of the St. Louis Fed, had put forth a proposal for digital central-bank money in public use, 'Fedwire for all' so to say > Fedcoin: On the Desirability of a Government Cryptocurrency, Macromania, 3 Feb 2015.
Prior to this, J.P. Koning had published a blog on
> Fedcoin, 19 Oct 2014. - Robert Sams comments on this at > Which Fedcoin?

• China's central bank, too  > aims to issue digital currency, South China Morning Post, 22 Jan 2016.

Japan' big banks plan digital currency launch >  Financial Times 26 Sep 2017. 
Japanese banks are planning to launch J-coin > MIT Technological Review.   

 Carl-Ludwig Thiele

Carl-Ludwig Thiele

What keeps most central banks from embracing the new developments? Quite typically in this respect, Carl-Ludwig Thiele, board member of the Bundesbank, portrays central bank digital cash as an interesting perspective, but does not consider it really relevant:  
From Bitcoin to digital central bank money - still a long way to go > 

 

Marilyne Tolle, Bank of England  > Central bank digital currency: the end of monetary policy as we know it? Bank Underground, 25 July 2016  

An explanation of the approach by Ellen Brown > Central Bank Digital Currencies: A Revolution in Banking?, Web of Debt Blog, 16 Sep 2016.