[Cryptography] Am I missing something about CBDC ?

John Levine johnl at iecc.com
Sun Dec 20 14:11:46 EST 2020

In article <CAHVSqQfrFy=VX2g9S0osZnuP=KgADLvxTyHN3nR9MUcmeX-zmw at mail.gmail.com> you write:
>The point is to have money with no counter party risk.  If you can have
>that,  then we can get rid of government insuring deposits of commercial
>banks.  Then we can let banks fail more easily.
>Banks can still do payments, but need to settle MY money once a day like
>they do with each other.

That's called full reserve or narrow banking. Demand deposits are
backed 100% by cash or central bank deposits. Loans are made from some
version of time deposits. Switzerland had a referendum in 2018 to go
to narrow banking, which since they are not fools, they overwhelmingly

As should be apparent, it has nothing to do with cryptography. You can
do narrow banking with paper and quill pens as well as with
blockchain. It also only reduces, not removes the liquidity risks that
deposit insurance relieves. If your narrow bank is issuing 20 year
mortgages and funds them with five year time deposits, it will still
have a problem five years from now if the time depositors all want
their money back, even though the mortgages are all being paid.


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