An old remedy for a new problem. How history provides the easiest route to making digital central bank money available to the public in a cash free world
Kerstins Rum Session 2: Central banking – a science or an art? organized by Lars Fredrik Øksendal and Anders Ögren
Abstract
The cryptocurrency frenzy and the diminished importance of notes and coins as means of payment have led to a scrutiny of the future of central bank money. At the core of the discussion is whether legal tender money, i.e., issued under a legal warrant by a central bank or other government institution, should be available to the public as digital central bank money after the final demise of cash or whether the whole field of money holding and payments should be left to private issuers (banks, potentially crypto agents). This article addresses the question from a monetary theory perspective and identify the critical issues at stake. Drawing on the historical example of how Norges Bank (as well as other banks of issue) functioned as deposit taking institutions available to the public until the inter-war years, a practical remedy is suggested.
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