Reading this paper by
The former reasons more on the lines of my comment on the subject: There is no reason (yes some hurdles) why we cannot all have accounts at the central bank and make payments with “on us” transfers in a single ledger. And state crypto makes no sense.
Maybe it is bad form to say it out loud, but the thing is banks as payment intermediaries will have their business drastically rationalized, no matter where the institutional winds blow.
As a young banker bragging of his economics savvy, I used to say that we banks had the legal monopoly of the payments system, bestowed to us by governments in exchange for help in managing monetary policy.
I still think this was the case and mostly still is, for the time being. It all began with the rise of central banks and the awareness of the very concept of monetary policy, back in the beginning of the last century.
This is on the brink of changing completely. Once we are fully bathed in electromagnetic radiation everywhere all the time, our ability to draw on e-funds is just as instantaneous as the greenback in our pocket, without the drawbacks and the limits. How could any of my former employers compete with this?
For those who are big on monetary policy (like in “I believe there should be one”), the book needs to be rewritten from scratch.
To what extent can private actor be allowed to expand credit with the magic of the multiplier?
How would authorities inflate or deflate the money supply?
The ultimate holder of the monopoly on dollar (and euro, renminbi, etc.) rest by definition on the government. What is to be seen is whether a few years or decades from now these will be just a unit of account for tax purposes, quaint relics of a time past or pushed altogether into oblivion by private, decentralized alternatives.
Banks will still need to intermediate credit for the foreseeable future, I imagine, and many other useful services will be invented and provided by financial institutions, though maybe on a different scale.