Here Come Central Bank Digital Currencies
Money For the Rest of Us
J. David Stein
4.5 • 1.4K Ratings
🗓️ 28 October 2020
⏱️ 30 minutes
🧾️ Download transcript
Summary
How central bank digital currencies would work, what is the motivation to create them and what are the risks.
Topics covered include:
- What percentage of central banks are working on a digital currency and plan to issue one soon
- What are the two kinds of money that central banks currently issue and how would a central bank digital currency differ
- How central bank digital currencies would be similar and different from Bitcoin and other cryptocurrencies
- What are the benefits and risks of central bank digital currencies
- What are the design principles that major central banks proposed for their digital currencies
- What percentage of central banks currently have the legal authority to issue their own digital currency
Thanks to Gen Z Green podcast and Masterworks for sponsoring the episode. Use code David for Masterworks to skip the wait list.
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Transcript
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| 0:00.0 | Welcome to Money for the rest of us. This is a personal finance show on money, how it works, how to invest it and how to live without worrying about it. |
| 0:09.0 | I'm your host David Stein today's episode 319. It's titled Here Comes Central Bank Digital |
| 0:17.5 | Currencies. I recently thought I hadn't received payment from a sponsor to the show. |
| 0:25.2 | I reached out to them because I didn't have payment in my checking account. |
| 0:29.1 | It turns out they had mailed me a check. The check was sent to a PO box I have in Phoenix. I'm in Idaho. |
| 0:37.0 | I won't be able to pick up this check for weeks. And then when I cash it, it'll take a number of days to clear to actually get the funds. |
| 0:45.4 | Now the sponsor could have wired me the funds or used A.C. |
| 0:50.0 | but there there would have been a delay of several hours to a day. |
| 0:53.0 | They could have paid me in Bitcoin or some other cryptocurrency, |
| 0:57.0 | but given the volatility of Bitcoin, the amount received could be less than the amount sent |
| 1:02.0 | after I convert the Bitcoin payment into |
| 1:06.0 | dollars. And of course they could have just mailed cash. But then what if it got lost in the |
| 1:12.0 | mail? |
| 1:13.0 | Suppose instead that this sponsor and I both had a savings account at the Federal Reserve, |
| 1:20.0 | using a digital token issued by the Federal Reserve. |
| 1:24.5 | The transfer could have been sent and received instantaneously. |
| 1:29.6 | The transaction would have been verified and added to the Central Bank's ledger of transactions in the Central Bank's digital currency. |
| 1:37.0 | Unlike a wire transfer which can cost up to $25, the transaction would have cost little if anything. |
| 1:45.3 | A recent survey by the Bank for International Settlements, the BIS, indicated that 80% of Central Banks |
| 1:52.4 | are engaged in some type of work related to issuing a Central Bank |
| 1:57.8 | digital currency, or CBDC for short. 40% of Central Banks have progressed from conceptual research to experiments, or proof of concepts. |
| 2:11.0 | Another 10% have developed pilot projects. |
... |
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