Tag Archives: Central Bank

FAS, 31 May 2020. PDF. Monetary deficit financing is the norm—after all, central banks distribute their profits. Monetary financing occurs in the context of regular open market operations and QE and, hyper charged, with helicopter drops. The question is not whether monetary policy should finance the government, but why it does so, and to what extent. Fiscal and monetary policy are inherently connected; what constitutes monetary policy is defined by objectives.

On VoxEU, Refet Gürkaynak and Deborah Lucas argue in favor of helicopter drops to finance the fiscal burden due to Covid-19 and they propose an elegant way to implement such drops without undermining the central bank’s equity position (if regulators accept accounting tricks). The special issue bonds would be zero coupon perpetuities and therefore would not obligate Treasury to any future payments. The legislation would require the Fed to buy these bonds from the banks at par. The...

Econs (a non-profit project of the communications department of the Russian central bank), February 13, 2020. HTML. Russian version of my VoxEU column on digital money and CBDC. What are we actually talking about? What do we know? And what should policymakers do? I discuss the following points: Finance has been digital forever – what’s new about ‘digital money’? Does the nature of money change? What is central bank digital currency? What is the link between CBDC and the blockchain? Would...

VoxEU, February 3, 2020. HTML. What are we actually talking about? What do we know? And what should policymakers do? I discuss the following points: Finance has been digital forever – what’s new about ‘digital money’? Does the nature of money change? What is central bank digital currency? What is the link between CBDC and the blockchain? Would CBDC have macroeconomic effects? Would CBDC foster bank disintermediation and bank runs? Why consider CBDC at all? What opportunities does CBDC...

The Central Bank of the Bahamas introduces CBDC, according to a press release (December 2019). The intended outcome of Project Sand Dollar is that all residents in The Bahamas would have use of a central bank digital currency, on a modernized technology platform, with an experience and convenience—legally and otherwise—that resembles cash. It is expected that this will allow for reduced service delivery costs, increased transactional efficiency, and an improved overall level of...

On Bank Underground, David Bholat and Karla Martinez Gutierrez described (in October 2019) the ownership structures of central banks across the world. From their post: Figure 4: Institutional detail on central banks not fully owned by governments

In an VoxEU column, Vladimir Asriyan, Luca Fornaro, Alberto Martin, and Jaume Ventura lay out their perspective on bubbly money as a complementary store of value and the role of monetary policy in supporting optimal levels of investment.

The Korean newspaper Workers cites the VoxEU column in which I argued that “Libra paves the way for CBDC.”

The BIS has issued two reports that assess the implications of unconventional monetary policies. The report prepared by the Committee on the Global Financial System discusses … a number of unconventional monetary policy tools (UMPTs). After a decade of experience with UMPTs the report takes stock of central banks’ experience and draws some lessons for the future. The report focuses on four sets of tools: negative interest rate policies, new central bank lending operations, asset purchase...

It seems one cannot make a name for one’s self on the Left, unless one has a proposal to tax wealth. Academics like Tomas Piketty have proposed it. And now the Democratic candidates for president in the US propose it too, while Jeremy Corbyn proposes it in the UK. Venezuela finally added a wealth tax in July. A Wealth Tax So how does a wealth tax work? The politicians quibble among themselves, as if the little implementation details that differ between them are...