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Benoît Cœuré

lines on the record: 39
first: 2020-10-22
most recent: 2020-10-22
sittings or episodes: 1
sources: podcast

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“That's how I understand what they're all saying, right? And then you can put very fancy concepts on it, which is fine. But as long as the outcome is that you keep a lot of flexibility and you err on the side of caution in terms of not allowing deflation to happen, I think that's fine. And I don't think the exact framework just matters too much.”
2020-10-22 · Odd Lots · Benoît Cœuré On Central Bank Digital Currencies And The Future Of Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, look, I don't want to comment on specific decisions by specific central banks. I mean, you can put very sophisticated words and concepts on that. I think at the end of the day, a lot of what is being done today in different places amounts to just making sure that you will have maximum flexibility to cope with economic uncertainty. And as you said, kind of tilting the discussion so that you're on the right side of the discussion and you prefer, you don't want to take the risk of having even lower inflation given that you're at or close to the lower bound in terms of your interest rates and given the harmful consequences of deflation. So you want to be, in terms of risk management, right, you want to be on the right side of that risk. And if you're going to take a chance, that will be the chance of a higher inflation because then you know what to do.”
2020-10-22 · Odd Lots · Benoît Cœuré On Central Bank Digital Currencies And The Future Of Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“Inflation, you're not going to think about that. So there are huge cognitive biases which are just normal and central banks have not really made the effort to kind of translate their concepts into concepts that people can relate to. And I think that's a big challenge for the future, that central banks are absolutely right to look at the economy in the aggregate, at an aggregate level. But when they formulate their policies and their targets in terms of inflation, they've got to translate it in a way that people can understand. And we're not doing that.”
2020-10-22 · Odd Lots · Benoît Cœuré On Central Bank Digital Currencies And The Future Of Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, it comes from the way statisticians and central bankers look at inflation is very from a thousand feet, right? It's a bird's eye view on everything that's going on in the economy across social groups, across age groups, across different places. And so it totally kind of ignores the diversity of consumption habits and also the fact that you buy different goods and services at different frequencies over time. So individuals are biased towards overweighting goods and services that they buy very often, like obviously, I mean, food and dairy and transports and refueling your car and that kind of things, and the price of smartphones might be collapsing. I mean, that's not something you buy very often. So when people ask you, come and ask you about”
2020-10-22 · Odd Lots · Benoît Cœuré On Central Bank Digital Currencies And The Future Of Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“Harmful, and it's already starting in the developing world. I mean, there is an active discussion on debt restructuring and debt initiatives in the developing world. If we stay there for a few more years, that will gradually come to the developed world. And that will come with huge political difficulties. So I guess the only conclusion is that you want a vaccine to be found very quickly. That's the conclusion. Think we can all agree with that.”
2020-10-22 · Odd Lots · Benoît Cœuré On Central Bank Digital Currencies And The Future Of Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“Has given them much more policy space. So you're seeing that happening in different places. The question is what happens if that a situation that can last for many years? because then public debt will be building up. Private debt will be building up as well. Some of it will be transferred onto the balance sheet of the government. And at some point, whatever the efforts of the central bank, the debt will be so high that you will need some kind of rescheduling or restructuring. And so if the situation with the virus stays as it is for a number for another few years, which of course nobody hopes, what today looks like good cooperation between monetary policy and fiscal policy and respectful of everyone's mandates, right? Not harmful to the independence of central banks. That's something that could become much more difficult to sustain because you will have to start discussions on some ways to share the fiscal burden. And these discussions can be politically very difficult.”
2020-10-22 · Odd Lots · Benoît Cœuré On Central Bank Digital Currencies And The Future Of Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“You don't know how much time it will come to go back to normal, right? Because the economy is not flexible enough to do it by itself. So that's a different situation, which also calls for a little bit of caution, because you can be stuck there in that kind of state of the world for much longer. And so far so good. I mean, what fiscal authorities and monetary authorities have done so far is exactly what you were suggesting and what we want to see. That is good complementarity between monetary policy and fiscal policy. Even in emerging markets, economies, by the way, you are now seeing some, I mean, many emerging market economies doing QE and the government is issuing more domestic debt. I mean, domestic currency denominated debt, which the central bank can partly buy. And that's a way to kind of strengthen the complementarity between monetary policy and fiscal policy.”
2020-10-22 · Odd Lots · Benoît Cœuré On Central Bank Digital Currencies And The Future Of Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I mean, I think the discussion, I mean, it looks different in different places. I think in the US, you have a For different reasons. One reason being that we've never been able, so I say we as a European, right now, we've never been able to find the right fiscal framework. And so fiscal policy has never been very helpful in helping the ECB manage the cycle and is becoming more helpful now. And you've discussed it with my former colleague, Vitor Constancio, and I agree with a lot of what he told you, that is now happening. And it's a very good development. But the other reason is that the economy in Europe is not nearly as flexible than in the US. So if you're in that kind of extraordinary situation where you need to turn the dial and have a very active monetary policy and fiscal policy at the same time because the economy is not responding”
2020-10-22 · Odd Lots · Benoît Cœuré On Central Bank Digital Currencies And The Future Of Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“Both businesses and consumers in a way that makes it very, very difficult to plan for the long term, which is what central banks should be doing, if you think of the kind of assignment of roles in the economic policymaking world, you would expect central bankers to care for the long term while politicians are kind of prisoners of short term incentives and constraints and political cycles and the like. And you would like central bankers to think for the future, but today they can't because it's just too uncertain. So it's very difficult to kind of make plans about the future of monetary policy. And I think the only sensible conclusion is that central banks need maximum flexibility to cope with all kind of outcomes. So they need to keep all their options open.”
2020-10-22 · Odd Lots · Benoît Cœuré On Central Bank Digital Currencies And The Future Of Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, well, that's true. It's true that I'm now old enough that I remember the days where interest rates were positive. These were the good old days. And the corona crisis, the corona shock has disrupted everything. So I think it's fair to say that there is no prospect, there is no short-term prospect of monetary policy normalization anytime soon because of the amount, the extraordinary amount of uncertainty that we have, which comes from outside the economy, which comes from the cycle of lockdowns and waves, etc. So as long as we'll have this kind of waves and uncertainty on lockdowns, there will be the economy will be in a state for very high fragility because expectations will because there is no way that businesses or consumers can form expectations about the future. So that kind of compresses the time horizon of”
2020-10-22 · Odd Lots · Benoît Cœuré On Central Bank Digital Currencies And The Future Of Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“I would agree with that. And I mean, the fact that there are political dimensions to it doesn't imply that central banks should defer to politicians, right? CBDC is about the future of money. It's about the future of monetary policy. It's about the future of payments. And so central banks should be on top of that discussion, which they are now. But I guess what we are both saying is there are dimensions, there are some trade-offs where you need to get a sense of the preferences of society. You need to take the pulse of society. And that's why in all places, CBDC will require extensive consultations, which is the way, for instance, the RIXBank in Stockholm has taken, which is the way the ECB now is taking, you need to consult a lot. That's not something that you want to do under closed door in a central bank somewhere.”
2020-10-22 · Odd Lots · Benoît Cœuré On Central Bank Digital Currencies And The Future Of Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“On capital and financial market expectations and on pumping money in and out of capital markets. But at some point that's hitting the limits because there are places in the economy where money just cannot reach. It also might create political issues. Because incredibly societies see monetary policy as being a conversation between central banks and capital market participants. And they feel excluded from that conversation. So that was my last word at the ECB last year in my last speech, in my last meeting at the ECB. The conclusion was that if monetary policy remains a conversation between central banks and capital markets, then we shouldn't be surprised if people don't trust us, right? And that's a little bit what we've seen. And CBDC can be a way to reconnect central banks with people if it's done well. But some central banks might want to go there. Some don't want to go there, and that's fine.”
2020-10-22 · Odd Lots · Benoît Cœuré On Central Bank Digital Currencies And The Future Of Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“All players, all corners of society. But if you want to do CBDC to do that, then you probably have to design your CBDC in a different way. And central banks have not decided yet, really. So we're a little bit at the crossroads there. And different central banks may take different decisions. And so my personal take, which doesn't commit anyone, and I'm not even doing monetary policy because I'm at the BIS, so it's really my personal view, is that it is worth reflecting on that. Because we're kind of at the end of a cycle where monetary policy, we've made monetary policy implementation incredibly sophisticated since there's a great financial crisis. And again, now through the corona crisis, but most of it, if not all of it, he goes through capital markets, right? So we have very different sophisticated ways, complex ways to influence”
2020-10-22 · Odd Lots · Benoît Cœuré On Central Bank Digital Currencies And The Future Of Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“And that's a decision to take early on because it impacts your architecture. It impacts the way you're going to do CBDC, right? If you want CBDC to be accessed by a broad range of economic players, and if you want to be able to control both the quantity and the price of that particular form of money, which is what monetary policy is about, then it's different from deciding that you're going to issue a given amount of CBDC and then you don't want to know where it's going, for instance. And so there is a potential to use CBDC in a kind of a tailor-made way, right, in a kind of very, very granular way to bring money to particular places to pump money down the last mile, as my colleague Augustine Carstens has once said. That's something that today's central banks very much want to see. Money being pumped down the last mile. And reaching”
2020-10-22 · Odd Lots · Benoît Cœuré On Central Bank Digital Currencies And The Future Of Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“and I really see a key question coming for each and every central bank to decide which is do you want to do CBDC for monetary policy reasons or do you want to make it as neutral as possible on the way with respect to the way you implement your monetary policy”
2020-10-22 · Odd Lots · Benoît Cœuré On Central Bank Digital Currencies And The Future Of Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“International financial architecture. And so you want Cort 2C coordination for the system to be stable. While monetary policy is a sovereign matter, is decided locally, people and governors want to talk to their and to report to their parliaments, right? To U.S. Congress, to the European Parliament, et cetera. That's not something they want to discuss in the open air and internationally. So that was a little bit of a sociological or political detour to explain to you why we're not discussing it. Now, of course, it is an issue. Of course, it is an issue that central banks would have to decide for themselves.”
2020-10-22 · Odd Lots · Benoît Cœuré On Central Bank Digital Currencies And The Future Of Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“And there is a simple reason to that, which is that monetary policy is a different mandate and it's very national, it's very domestic, and it's being decided in different places, like monetary policy committees. And so central banks don't want to mix up the two discussions because if CBDC comes and the way they will use it for monetary to do monetary policy is something that they want to decide for themselves. And so the case for international cooperation today is not on the monetary policy side. It's on the payment side because we want the payment architecture to work smoothly and it is global, right? And this is why you already see and you're going to see a lot more international coordination on CBDC and on digital money generally because payments are the backbone of the”
2020-10-22 · Odd Lots · Benoît Cœuré On Central Bank Digital Currencies And The Future Of Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“That's a really good question. It's a little bit the elephant in the room because it's a really good question and it's a question that most central banks are working hard to not to answer and take the report we've been discussing. We kind of allude to that, but we very early on upfront we say we're not going to discuss it, right?”
2020-10-22 · Odd Lots · Benoît Cœuré On Central Bank Digital Currencies And The Future Of Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“Would be a concern for the IMF, would be a concern for the World Bank, and that's something that we want to discuss. So you see new risks coming, right? But there is no reason why a priori stable coins should be rejected. And let me just for the record mention that there are other forms of stablecoin which hardly anyone speaks about, which are wholesale stablecoins, right? Imagine a coin that would be issued by a large commercial bank to settle transactions within a few small group of clients, and that would be 100% backed by central bank money. That's a stable coin. It's much less of a discussion because it's not going to reach billions of people, but only a handful of commercial banks. So that's pretty easy to understand and to regulate, but it's also coming.”
2020-10-22 · Odd Lots · Benoît Cœuré On Central Bank Digital Currencies And The Future Of Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“Or investors are protected and know the risks they are taking. That might be okay to have that kind of payment systems. I don't really see that as a currency. I see that as a new means of payment, which can be convenient, but which also raises risks. And these risks have been highlighted last year in the G7 report on stablecoins and recently by the FSB. And the risks come from the fact that these new projects are global, Libra is an obvious example. And so there are risks to the, for instance, to the functioning of the international monetary system, which are entirely new, which you didn't have with earlier forms of cryptocurrency. Like what happens if you have a major stablecoin which is being issued and you start to see substitution with local currency in some smaller jurisdiction? That would be a concern for that jurisdiction.”
2020-10-22 · Odd Lots · Benoît Cœuré On Central Bank Digital Currencies And The Future Of Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“What I wouldn't really see are stable coins as currencies. So it's a little bit of a misnomer. I would see stable coins as new payment systems, which are very integrated back to end, closed loop payment systems. So it's a little bit different from the kind of innovation that we've seen until recently in the payment world, which was really at the front end, right? It was about providing you with a better interface, providing you with an interface on your smartphone and so on and so forth. And all of a sudden we see a payment architectures which are entirely private, which are encompassing and go and include the back end, that is the pipeline that will bring money from one place to another, which wasn't the case so far. And that might be okay. That might be okay. If it's well regulated, if a consumer...”
2020-10-22 · Odd Lots · Benoît Cœuré On Central Bank Digital Currencies And The Future Of Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“Can I ask a question? I mean, you mentioned stable coins. We talked about Libra, and I think that there is a sort of spectrum of what we see in the stablecoin space from sort of extremely projects that attempt to be very legitimate. Facebook, Libra is probably one of them. Do others that are probably a little diceier. What is the regulatory case for the existence of stable coinage? Because central bankers, regulators have been pretty”
2020-10-22 · Odd Lots · Benoît Cœuré On Central Bank Digital Currencies And The Future Of Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“And so there is room for everyone. There is room for everyone. The key thing is any form of commercial money has to be regulated. And there might be financial stability considerations which would lead us to impose some requirements like settlement in central bank money. But apart from that, we need the private sector to innovate. All that innovation will come from the private sector. I'm not aware that central bankers are particularly good at finding new technologies. That's not what we do.”
2020-10-22 · Odd Lots · Benoît Cœuré On Central Bank Digital Currencies And The Future Of Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“Second thing is financial stability. And an essential part of financial stability is the existence of core payment systems at the heart of the financial infrastructure which connect financial institutions, which connect jurisdictions, and which allow real-time settlement in central bank money, right? And so the key role of the central banks really is at the heart of the system to provide stability. And we don't want to take over. And there are many, many things, most things that we wouldn't do well and we're not going to do. So to give an obvious example, if CBDC comes as a token, most likely it's going to be handled in wallets, right? So you would have a wallet on your phone, say, with CBDC, with central bank tokens in it. That's not something central banks should be doing. It's very obvious to all of us that wallets are something for the private sector to do, right?”
2020-10-22 · Odd Lots · Benoît Cœuré On Central Bank Digital Currencies And The Future Of Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“Principles. And as a central banker, I would say our job is to ensure price stability or monetized stability, meaning that you should have the ways and means to implement your monetary policy, whichever monetary policy you've decided as a monetary policy committee. That's the first thing. And CBDC should not hamper that. And if it can help, it's even better. We can discuss it later.”
2020-10-22 · Odd Lots · Benoît Cœuré On Central Bank Digital Currencies And The Future Of Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“So we shouldn't be competing against Facebook because we are not in the same line of business, right? We are absolutely not in the same line of business. And in a sense, if I may take a step back, that's exactly why you mentioned the report which was issued by seven central banks together with the BIS, and that's a working group I was co-chairing with Sergeant Conley from the Bank of England. It started exactly with the consideration that we central bankers have to come back to first principles. And too often the discussion on digital money, digital currency, started from the wrong place, like started from the technological end of the discussion. Are we going to do CBDC using blockchain? And if it's a blockchain, is that going to be Corda or Hyperledger or whatever else? Which is an important discussion in due time, but it's not the right place to start from. We want to start from first.”
2020-10-22 · Odd Lots · Benoît Cœuré On Central Bank Digital Currencies And The Future Of Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“Using their bank reserves just as they buy banknotes today and see the central bank could regulate the amount of CBDC for monetary policy purposes, but the central bank would not know exactly to which CBDC has been distributed. And that would be subject to AML and CFT and generally no customer diligence and know your client client rules just as any transaction today. So that's a possible way that would reconcile different aspects.”
2020-10-22 · Odd Lots · Benoît Cœuré On Central Bank Digital Currencies And The Future Of Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“But on the other hand, you also have regulation and laws against money laundering, against the financing of terrorism, et cetera. Which are equally important, right? And so any CBDC architecture will have to strike a balance between these two aspirations. And the exact, the way we turn the dial, in my view, should be a political discussion. I don't see how central bankers or bank supervisors could decide on that kind of things. It has to be a political discussion. And again, there are ways to reconcile. So for instance, I'm just giving an example. So I'm not saying that the way to go, but just to illustrate, you could imagine a system where CBDC would be distributed by banks, right? So the front end would be banks. You would keep talking to your bank. You wouldn't go directly to the Fed or the HKMA or the ECB. You would get your CBDC from your bank just as you get your bank notes from your ATM. So exactly the same as today. Banks would buy a given quantity of CBDC from the central bank.”
2020-10-22 · Odd Lots · Benoît Cœuré On Central Bank Digital Currencies And The Future Of Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“And by the way, something we found out is that financial regulators don't often talk to privacy regulators or to privacy groups. And so it might sound like kind of an ancillary discussion, but it's actually very important that these kind of technical innovation forces us to also to rethink the way we do regulation and to connect silos, right, which until recently weren't connected at all. And so we are talking now with privacy regulators and with privacy groups. And that's an instance of choices that have to be made by society and through a political process. On the one hand, you have a demand, you have demand for privacy, which is there and which is absolutely legitimate and which is already in some places like Europe very much enshrined and hardwired into law with GDPR in particular.”
2020-10-22 · Odd Lots · Benoît Cœuré On Central Bank Digital Currencies And The Future Of Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“So yeah, I mean, we've been doing that in particular when last year there was a related discussion, not on CBDC, but on stablecoins, right? Starting from Libra, right? And there has been an active discussion in policy circles on how to regulate stablecoins. And the FSB just came with a report on that.”
2020-10-22 · Odd Lots · Benoît Cœuré On Central Bank Digital Currencies And The Future Of Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“We don't want to kill that system. And so there is an active discussion on how to mitigate the kind of risks you're highlighting, Tracy, which is that CBDC would take over bank deposits and would make banks more vulnerable. And there are different answers. We can go into the details if you wish. And one of the important discussions we'll have in the coming month and years is what the best answer if we don't want this to happen.”
2020-10-22 · Odd Lots · Benoît Cœuré On Central Bank Digital Currencies And The Future Of Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“Thinking about this future ecosystem is exactly what you mentioned, which is we don't want CBDC to kill banks. We don't want to go to the extreme of a system where all economic players would use CBDC and banks would at best be kinds of conduits who would buy assets or extend credits and fund on capital markets, you know, narrow banks or a system of sovereign money at its sometimes called Switzerland had a vote, as you may remember, on something called Fallgel, which was rejected. So that's people that's something that most people don't want, and that's something that regulators and central bankers don't want because they see a value in the existence of commercial banks as institutions who take risk, who transform credit, who take maturity risk and credit risk, and who do all kind of financial intermediation in the economy.”
2020-10-22 · Odd Lots · Benoît Cœuré On Central Bank Digital Currencies And The Future Of Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“So that's a very important point, Tracy, and that's also why I'm saying that we need an ecosystem, right? And contrary to what people sometimes fear or think, there is no intention by central banks to have a monopoly on all kinds of money. The economy is operated with commercial money today. When you buy a beer in a bar, it's very, very likely that you're going to pay either with a credit card or with your telephone. And that will be eventually coming from your bank account. And it's commercial money. That's not a claim on the central bank. And we're going to keep it like that, right? So we'll keep an ecosystem where you'll have different forms of different means of payments, different forms of money, and most of it will be commercial. The question is, do we want to keep central mark money at the heart of the system to make it stable, right? And one of the key considerations that we have in”
2020-10-22 · Odd Lots · Benoît Cœuré On Central Bank Digital Currencies And The Future Of Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“And you will find many people who would trust Citibank better than their central bank. And you find people who trust Bitcoin more better than the dollar of the euro or the euro. And so the conclusion here is that we have to let people decide for themselves which kind of money they want to use, provided that they are well informed on the risks, on the implications. But the emerging consensus is that a substantial fraction of society will ask to keep that contact with the central bank which is the ability to use a direct liability on a public institution under parliamentary supervision as part of a political system. And if we want to keep that kind of access, then we need to do CBDC.”
2020-10-22 · Odd Lots · Benoît Cœuré On Central Bank Digital Currencies And The Future Of Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“So my answer, and that might be surprising coming from a central banker, but my answer would be that it's not even a policy discussion. It is a political discussion. Because the key question here is, are we satisfied if all money used by citizens for their daily transactions is commercial money? That is, are we satisfied if the whole functioning, the daily functioning of the economy is at the end a conversation between citizens and banks, right? Or do we want the central bank as a public institution to be part of it? And what's very important here, and also for the rest of our discussion, is that the answer might be different in different places. That is, in some places, citizens may trust, and in many places, I guess, citizens would trust the central bank better than Visa, Mastercard, or Facebook or Citibank, right? In other places or in other corners of society that might not be the case.”
2020-10-22 · Odd Lots · Benoît Cœuré On Central Bank Digital Currencies And The Future Of Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“Transacting, exchanging tokens on DLTs, right? If you want to keep settling these transactions in central Mark Money, then you need a way to either connect the DLT with the traditional payment infrastructure or to issue a central bank token to the DLT. And that's what we call wholesale CBDC. So there are two answers. Either it's wholesale CBDC because the technology underlying financial infrastructures is changing or its retail CBDC because in some places at least cash may be disappearing. So these are two separate questions at both ends of the financial system. At the front end and at the back end.”
2020-10-22 · Odd Lots · Benoît Cœuré On Central Bank Digital Currencies And The Future Of Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“But as a token, for instance. Which gives the answer to your initial question. So what's the question we are trying to answer? What's the problem statement? Well, there are two problem statements. The first one is what happens if cash disappears, if citizens don't want to use banknotes anymore, and are we happy if the only way they have to pay for their expenses, consumption, is to use commercial money, money issued by banks, to draw from their bank accounts? Or do we want to keep providing them with central bank money, which today doesn't exist in a digital form. So that's the first question. And the second question is what happens if at the core of the system banks or financial market infrastructures would need central bank money to settle their transactions in a way that is not an account at the central bank. And that could be a token, for instance. So imagine a future, maybe a near future where some financial market infrastructures would be”
2020-10-22 · Odd Lots · Benoît Cœuré On Central Bank Digital Currencies And The Future Of Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“It's not the liability of a commercial bank or any other player. It is digital, so it's not physical like banknotes. And it's not issued to banks as part of monetary policy as we know it, which is as bank reserves, right? So bank reserves is, as you think about it, it's money that banks have on their account with a central bank. It is digital. So it is central bank digital currency. And it has been existing for decades. So here we're talking of any liability of the central bank which is digital, but not issued to commercial banks as part of the implementation of monetary policy, which means two things. Either it is digital and issued directly to citizens. So it's equivalent digital equivalent of a banknote, and that would be entirely new. Or it is issued to commercial banks, but not as a deposit on an account.”
2020-10-22 · Odd Lots · Benoît Cœuré On Central Bank Digital Currencies And The Future Of Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“So yeah, I mean, these are excellent questions because you may wonder, I mean, we're living in a world which is already massively dematerialized. Most of money, I mean, more than 90%, 95% of money is already digital. Might wonder why all of a sudden are we discussing digital currency? And so we're here to discuss central bank digital currency, right? CBDC. And so let me focus on the CB in CBDC. That is the definition of CBDC. It's money that is issued by the central bank, meaning it's a liability of the central bank.”
2020-10-22 · Odd Lots · Benoît Cœuré On Central Bank Digital Currencies And The Future Of Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source