The social issues raised by CBDCs are without question real.
- This includes concerns about the privacy of the currency and about retaining access to cash for those who neither want nor can access CBDC.
- There are also those who fear deposits might flee from commercial banks to the safe haven of CBDC at the first whiff of financial grapeshot.
Cash is not just a payments medium; it is also a means of financing governments and central banks.
- Physical cash is an interest-free loan to government, a direct tax on citizens levied in proportion to their cash holdings at a tax rate given by the interest rate.
Most people are blissfully unaware they are being taxed in this way. Seigniorage is a stealth tax that is both large and highly …