Tag Archives: Dollarization

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...

On his blog, JP Koning provides an account of recent monetary policy in Zimbabwe: The country dollarized in 2008. The central bank offered USD deposit accounts for banks, specifically for inter bank payments. But these accounts were not fully backed by USDs, or the central bank rationed access to USDs for other reasons (early 2016). Banks got squeezed, bank customers started a run, and the government imposed withdrawal limits. Retailers started to charge higher prices for “plastic money”...

In the FT, David Pilling reports about Somalia which has managed without central bank issued money for decades. … up to 98 per cent of local banknotes are fake … With the help of the International Monetary Fund, Mogadishu plans to print official banknotes for the first time in more than a quarter of a century … No official Somali currency has left the presses since the Horn of Africa nation descended into clan warfare after the collapse of the government in 1991. … warlords, businessmen...

NZZ, November 29, 2016. HTML, PDF. Central banks are increasingly interested in employing blockchain technologies, and they should be. The blockchain threatens the intermediation business. Central banks encounter the blockchain in the form of new krypto currencies, and as the technology underlying new clearing and settlement systems. Krypto currencies bear the risk of “dollarization,” but in the major currency areas this risk is still small. New clearing and settlement systems benefit...

VoxEU, October 19, 2016. HTML. Central banks are increasingly interested in employing blockchain technologies. The blockchain threatens the intermediation business. Central banks encounter the blockchain in the form of new krypto currencies, and as the technology underlying new clearing and settlement systems. Krypto currencies bear the risk of “dollarization,” but in the major currency areas this risk is still small. New clearing and settlement systems benefit from central bank...

The blockchain technology opens up new possibilities for financial market participants. It allows to get rid of middle men and thus, to save cost, speed up clearing and settlement (possibly lowering capital requirements), protect privacy, avoid operational risks and improve the bargaining position of customers. Internet based technologies have rendered it cheap to collect information and to network. This lies at the foundation of business models in the “sharing economy.” It also lets...