‘We can have money even without central banks’ Related articles

The digital euro is a step forward and, according to macroeconomist Edin Mujagic, the question is whether this is good news. According to him, the fact that the ECB wants digital currency so much has to do largely with self-preservation. “If you get a private digital currency that turns out to be a winner, that’s a small step towards why we need central banks.”

Of course, that’s not the only reason the central bank would like to introduce a digital currency. “In a 2019 paper, the IMF sought to answer the question: How do we get central banks to make interest rates very negative, actually five or ten percent?” Mujagic said. The answer: a digital currency alongside cash.

If the central bank cut interest rates to minus 10 percent right now, everyone would immediately run to the bank to get their money, Mujagic said. The introduction of a digital currency in addition to cash solves this problem. ‘Then the central bank can play with the exchange rate between the two. If you get it right and the interest goes down to minus 10 percent, then people have no reason to take their money out of the bank. Because then cash is worth less».

Need

The fact that central banks seem to suddenly ramp up digital currency is partly due to necessity, according to Mujagic. “You have to imagine getting a private digital currency that turns out to be a winner. ‘So it’s a small step towards the question ‘why do we need central banks? So, as a central bank, you have to go with you.’

However, this is a fair question, according to the economist. After all, in the general framework of the history of money, central banks are a fairly recent phenomenon. “We are used to living in a world with central banks, but history teaches us that we can have money without a central bank.”

ECB President Christine Lagarde. The digital euro is a step forward and, according to economist Edin Mujagic, the question is whether this is good news. According to him, the fact that the ECB wants digital currency so much has to do largely with self-preservation. “If you get a private digital currency that turns out to be a winner, that’s a small step towards why we need central banks.” (ANP/Zuma Press)

Author: Bram van Eijndhoven
Source: BNR

LEAVE A REPLY

Please enter your comment!
Please enter your name here

spot_imgspot_img

Hot Topics

Related Articles