The distinction between synthetic central bank digital currency (sCBDC) and intermediated CBDC (iCBDC) will be of interest mainly to lawyers and regulators. From an economic perspective, the two products appear to be very close–if not perfect–substitutes (assuming their design is optimized). The practical difference between a Federal Reserve liability and a private liability fully-insured by the government seems almost non-existent. [Read more]
This post was sorta in response to the George Selgin critique of the Fed’s CBDC discussion paper, in which he claims that sCBDC is the superior option because it will better promote digital currency (DC) diversity and innovation because it allows for numerous, entirely distinct retail DC, whereas iCBDC provides for a single DC only, albeit one offered and administered by private-sector firms. Both articles are worth a read, especially for the comments.
There was also a vigorous Twitter thread on the topic that is quite interesting. Although the two articles are U.S.- focused, the discussion around CBDC architecture applies to all retail CBDC design thinking.
A bill has been introduced into the Arizona state senate that seeks to add bitcoin to the list of instruments considered legal tender and a lawful medium of exchange in Arizona, enabling residents to pay debts, public charges, taxes and dues with the crypto-asset. What is not clear to me is whether Arizona has what I call a “strong-form” legal tender, by which it’s illegal to refuse payment in legal tender, and whether such a law is enforced. Otherwise it’s quite toothless and meaningless. [Read more]
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The CBDC Think Tank (CBDCTT) is hosting an in-person CBDC Workshop in Washington DC on February 24 exclusively for central bank and finance ministry staff looking to understand and position for CBDC issuance. [Register here]