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



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  or print out as a PDF >  

A version of the paper >
Digital Currency. Design principles to support a shift from bankmoney to central bank digital currency
has been published in the real-world economics review, issue no. 88, 10 July 2019, 76–90.

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• Miguel Fernandéz Ordóñez, former Governor of the Banco de España, has come forth as a proponent of what he calls secure money, that is, digital central bank issued currency. Read his paper on
The Future of Banking: Secure Money and Deregulation of the Financial System.

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

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• 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 > 
The autho also wanted to send you a Message from the future: 25,000 euros for debt reduction for each citizen in the eurozone

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.  

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.

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Sovereign Currency on Account

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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 first report from Sep 2017  > The riksbank's e-krona project.
The second report followed in Oct 2018 > E-krona project, report 2.

• 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.
Lars Alaeus, Samuel Orrefur, Spencer Veale > Sweden's central bank to consider implementing digital cash, 30 Nov 2016. 

The Bank of England had investigated Central Bank Digital currency (CBDC) early on. In June 2016 Governor Mark Carney announced to extend access to the BoE's payment system to non-bank payment service providers. Even though the technical form of CBDC was left open, it sounded like a variety of sovereign crypto coins. In the meantime, however, the BoE’s CBDC designers too apparently think of an account-based solution.

Here the latest CBDC 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. 

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.

In the meantime, the BoE’s CBDC project has been ‘deprioritised’. Earlier papers had included:
J. Barrdear and M. Kumhof > The macroeconomics of central bank issued digital currencies, July 2016.
Ben Broadbent > Central banks and digital currencies, Bank of England, 2 March 2016.

Other central banks carry on with their investigations:
The Central Bank of Iceland has published an interim report on its perspectives regarding a > Rafkrona (e-krona), Oct 2018
• The Banco Central del Uruguay has run an experiment with e-pesos, using the central-bank account of payment service providers. Here is a report on the experiment: Uruguayan e-Peso on the context of financial inclusion, by central bank member Gerardo Licandro, Nov 2018.

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For an overview of approaches to CBDCs see two recent reports by by the Bank for Internat. Settlements:
• Central Bank Digital Currencies, March 2018.
• Proceeding with caution – a survey on central bank digital currency, Jan 2019

Sovereign Cryptocurrency (based on distributed ledger technology)

Michael Kumhof on Central Bank Issued Digital Currency

The Republic of the Marshall Islands has passed the Sovereign Currency Act 2018. The Act establishes a crypto coin called SOV as legal. The SOV is based on distributed ledger technology and shall be issued by the country’s treasury by way of Initial Currency Offering in exchange for US dollars (the official national currency).

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.

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• 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.

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