The Future of Money and the Central Bank Digital Currency Dilemma
Fecha
2020Disciplina/s
Administración y Dirección de EmpresasMateria/s
CBDCStructural bank disintermediation
Money creation
Fractional reserve banking
Full reserve banking
Resumen
In this paper we set out a three-pillar monetary-financial framework to (i) analyze,
categorize and compare past, current and emerging means of payment; to (ii) capture their creation
and destruction processes through sectoral balance sheet dynamics; and to (iii) identify the inherent
risks to the current monetary-financial system, also known as the fractional reserve banking system.
These risks, which stem from sudden shifts in money demand and supply, are as follows: (I) risk of
a cashless society; (II) risk of structural bank disintermediation; (III) risk of systemic bank runs; (IV)
risk of currency substitution; and (V) risk of economic and financial bubbles. This framework will
guide the assessment of the central bank digital currencies (CBDC), which are considered as the next
step in monetary evolution. We will analyze two large groups of CBDC proposals: (i) proposals
aimed at complementing cash and bank deposits; and (ii) proposals aimed at replacing all bank
deposits ...