The truth is CBDCs are government’s attempt to protect its privileged position and exert more control over people’s money.
In a recent interview, former International Monetary Fund (IMF) official Eswar Prasad discussed his new book, The Future of Money: How the Digital Revolution is Transforming Currencies and Finance. Naturally, Prasad talked about central bank digital currencies (CBDCs).
Prasad, now a professor of trade policy and economics at Cornell University, gave a blunt assessment of how CBDCs will affect monetary policy:
One should recognize that the CBDC creates new opportunity for monetary policy. If we all had CBDC accounts instead of cash, in principle it might be possible to implement negative interest rates simply by shrinking balances in CBDC accounts. It will become a lot easier to undertake helicopter drops of money. If everybody had a CBDC account you could easily increase the balance in those accounts.
Prasad’s “helicopter drops of money” informed the article title, but the flip side of CBDC helicopter money is the real attention getter. It’s right there in plain sight: shrinking balances in CBDC accounts to implement negative interest rates.
In other words, central banks will take money out of people’s accounts to conduct monetary policy. …
