Money: Digital Currencies Flashcards
how long have debit cards been around
40-50 years
Can the Fed fail like a bank?
no because they can make unlimited money.
what type of money can banks make
digital IOUs but not physical money
what is the appeal of owning reserves instead of bank deposits
because counterparty is federal reserve so more safe.
what is risk of bank deposit. who does is matter more to
default on their debts, matters to people with over 250k in bank account
who are retail CBDC issued by
who are they used/held by
the fed
used/held by HHs and Firms
retail CBDC promisesq
you can open account with the Fed (not just bank accounts now)
who are cryptocurrencies issued by
who are they used/held by
algorithm
HH and firms
can a bank accomodate everyone
no
what does wholesale CBDC already exist as
reserves (fed to banks)
is retail or wholesale CBDC money
retail (retail = buying stuff) banks dont buy things from one another, they settle debts
what do banks hold with each other
tabs. they dont do it real time necause there are too many trasnactions that hapens
what within a bank can happen within an insant
wires
what are potential benefits within country of retail CBDC
- increase access to the underbanked
- lower interchange feed for merchants
- higher interest rates on demand deposit accounts
+)ability to set (-) interest rates (also if we abandon cash)
Potential benefits of CBDC cross-border
Improve cross border payments (poster child of inefficiency)
