US Treasury Report Raises Concerns About CBDC Impact on Banks And Households
Before now, US lawmakers expressed dissatisfaction with developing central bank digital currencies (CBDCs). In a new bill, the board noted that the Fed has no authority to develop and issue a central bank digital currency, as it may affect the privacy protection of digital asset investors.
That part is interesting; that the Fed has no authority (as yet) on CBDCs, and hence may be concerned with losing its whole empire. Given the pressure banksters have on mere politicians this seems very unlikely. But still, not in writing yet. This could be a way to be free from the parasites.
Digital Currency May Increase Household Welfare, Lower Volatility but Pose Risks to Banks
Research paper: Digital Currency and Banking-Sector Stability
We suppose that digital currencies present a source of competition for banks’ liabilities because households hold both digital currencies and bank deposits within their portfolio of liquid claims.
OK, I see why one would model this mixed scenario, but is a dumb assumption that this would hold beyond any period of adjustment. I mean, a bank's deposit would also be in the CBDC, so they are not two different forms of the same money.
The paper also has a linguistic con by using the word "households" in their model - this does not mean what one would think it means.
Since banks are shareholder-maximizing frms rather than separate agents, households internalize the value of future bank dividends in their consumption policy. Therefore, households consume a fraction r of their total wealth and hold positive quantities of capital if the expected excess returns equal the covariance of their consumption with returns.
How many real households - not just model actors - have a significant part of their income from bank yields!?
Banks will likely remain as intermediaries between CBDC issuance and the economy. This will also allow them the current monetary con of making profits from sucking the life out of the economy.