The Real Scandal of Central Bank Digital Currency

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 …

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