Meaning of DC
Digital currency (DC) is a now widely discussed concept of a new form of central bank money. It is meant to circulate side-by-side with bankmoney (i.e. sight or demand deposits), in parallel and competition with it, similar to the still familiar co-existence of central-bank cash with bankmoney.
First design studies on DC were put forward by the the Bank of England, the Swedish Riksbank and the BIS, but also from academic researchers and earlier on from monetary reform initiatives. Meanwhile, most central banks have expressed their interest in such an approach.
Initially, DC was imagined to come in the form of cryptocurrency based on DL or blockchain technology. The new technology, however, is still in its infancy. By comparison, tried and tested ways of how to manage money-on-account and payments from and to accounts are fully suited for implementing DC. For the foreseeable future, DC is very likely to come in the form of money-on-account – which does not exclude the application of cryptographic technology in a more distant future.
Firms and people would chose to maintain a bankmoney account (a bank giro account), or a currency account, or both in parallel.
Read more by downloading the full paper Presentation Digital Currency Design Principles.
This Post Has One Comment
Young Kim
13 Nov 2018Most of us consider the money put into the account of deposit on demand as ours, and see no difference from cash. This money is already managed digitally: transfer, make payment with. It is legal tender.
I don’t understand why the author exclude the bank digital money from DC.
I think it’s time to implement 100% reserve system and upgrade clearance system to embrace all kind of legal tenders into a single Currency Control System.
All current bank money could be recognised as central bank DC without any charge to the banks. Please refer to my blog: https://blog.naver.com/youme41_368/221348383408