BANK DEPOSITS

Transcription

1 DIGITAL CASH

2 PHYSICAL CASH

3 PHYSICAL CASH 3%

4 BANK DEPOSITS

5 BANK DEPOSITS %

6 WHO CREATES BANK DEPOSITS?

7 BANK OF ENGLANd Commercial [i.e. high street] banks create money, in the form of bank deposits, by making new loans. Quarterly Bulletin 2014 Q1

8 BANK OF ENGLANd When a bank makes a loan, for example to someone taking out a mortgage to buy a house, it does not typically do so by giving them thousands of pounds worth of banknotes Quarterly Bulletin 2014 Q1

9 BANK OF ENGLANd Instead, it credits their bank account with a bank deposit of the size of the mortgage. At that moment, new money is created. Quarterly Bulletin 2014 Q1

10 WHO CREATES MONEY? BANK NOTES BANKS DEPOSITS & COINS GOVT

11 WHO CREATES MONEY? 97% BANK NOTES BANKS DEPOSITS & COINS GOVT

12 WHO CREATES MONEY? 97% BANK NOTES BANKS DEPOSITS & COINS GOVT 3%

13 WHO CREATES MONEY? 97% BANK BANKS DEPOSITS

14 WHO CREATES MONEY? 97% BANKS BANK DEPOSITS <<< Backed by risky loans

15 PAYMENTS PSPs & NEW ENTRANTS SectionName INDIVIDUALS, BUSINESSES, NON-BANKS

16 PAYMENTS The payment system runs on bank deposits. PSPs & NEW ENTRANTS SectionName INDIVIDUALS, BUSINESSES, NON-BANKS

17 PAYMENTS The payment system runs on bank deposits. PSPs & NEW ENTRANTS SectionName INDIVIDUALS, BUSINESSES, NON-BANKS

18 PAYMENTS The payment system runs on bank deposits. If banks fail PSPs & NEW ENTRANTS SectionName INDIVIDUALS, BUSINESSES, NON-BANKS

19 MERVYN KING Governor of the Bank of England Speech: Banking - from Bagehot to Basel, 25th Oct 2010

20 MERVYN KING Governor of the Bank of England If there is a need for genuinely safe deposits the only way they can be provided, while ensuring costs and benefits are fully aligned, is to insist such deposits do not coexist with risky assets. Speech: Banking - from Bagehot to Basel, 25th Oct 2010

21 MERVYN KING Governor of the Bank of England If there is a need for genuinely safe deposits the only way they can be provided, while ensuring costs and benefits are fully aligned, is to insist such deposits do not coexist with risky assets. Speech: Banking - from Bagehot to Basel, 25th Oct 2010 Separate payments from lending?

22 SEPARATE PAYMENTS AND MONEY CREATION FROM LENDING FREE FROM PositiveMoney.org >>>

23 DIGITAL CASH January 2016

24 DIGITAL CASH Everyone should be able to hold an electronic version of physical cash (central bank money), connected to existing payment system. January 2016

25 DIGITAL CASH Everyone should be able to hold an electronic version of physical cash (central bank money), connected to existing payment system. January 2016 Open up competition in the payments system.

26 BANK OF ENGLANd From a monetary and financial stability point of view, what are the costs and benefits of making a new form of central bank money accessible to a wide range of holders? What would be the impact on existing payment and settlement systems? One Bank Research Agenda Feb 2015

27 DIGITAL CASH January 2016

28 DIGITAL CASH Key features January 2016

29 DIGITAL CASH Key features January 2016

30 DIGITAL CASH Key features Safeguarding: 100% of funds held at Bank of England January 2016

31 DIGITAL CASH Key features Safeguarding: 100% of funds held at Bank of England (No need for FSCS coverage; safer than bank January 2016 deposits)

32 DIGITAL CASH Key features Safeguarding: 100% of funds held at Bank of England (No need for FSCS coverage; safer than bank January 2016 deposits) Completely risk-free

33 DIGITAL CASH Key features Safeguarding: 100% of funds held at Bank of England (No need for FSCS coverage; safer than bank January 2016 deposits) Completely risk-free Connected to payment services

34

35 Payment Institutions

36 Payment Institutions Account Holders x 60 million accounts

37 BANK OF ENGLAND Aggregated Digital Cash 100% Reserve Payment Institutions Account Holders x 60 million accounts

38 BANK OF ENGLAND Aggregated Digital Cash 100% Reserve Payment Institutions Payment Instructions & Updates Account Holders x 60 million accounts

39 BANK OF ENGLAND Aggregated Digital Cash 100% Reserve Payment Institutions Payment Instructions & Updates Account Holders x 60 million accounts

40 BANK OF ENGLAND Payments Aggregated Digital Cash 100% Reserve Payment Institutions Payment Instructions & Updates Account Holders x 60 million accounts

41 BENEFITS

42 BENEFITS More competition in payments:

43 BENEFITS More competition in payments:

44 BENEFITS More competition in payments: Banks no longer gatekeepers to the payment system

45 BENEFITS More competition in payments: Banks no longer gatekeepers to the payment system

46 BENEFITS More competition in payments: Banks no longer gatekeepers to the payment system

47 BENEFITS More competition in payments: Banks no longer gatekeepers to the payment system

48 BENEFITS More competition in payments: Banks no longer gatekeepers to the payment system

49 BENEFITS More competition in payments: Banks no longer gatekeepers to the payment system Easier setup & regulation (because no risk)

50 BENEFITS

51 BENEFITS Safer banking system:

52 BENEFITS Safer banking system:

53 BENEFITS Safer banking system: Risk-free alternative to bank accounts

54 BENEFITS Safer banking system: Risk-free alternative to bank accounts Less need to guarantee banks

55 BENEFITS Safer banking system: Risk-free alternative to bank accounts Less need to guarantee banks Less liquidity/credit risk

56 BENEFITS Safer banking system: Risk-free alternative to bank accounts Less need to guarantee banks Less liquidity/credit risk More payments in central bank money instead of deposits

57

58 Financial inclusion?

59 Financial inclusion? Banks only provide accounts to potential debtors

60 Financial inclusion? Banks only provide accounts to potential debtors PSPs don t need to worry about your ability to borrow

61

62 New options for monetary policy:

63 New options for monetary policy: Abolish physical cash and apply negative interest rates

64 New options for monetary policy: Abolish physical cash and apply negative interest rates

65 New options for monetary policy: Abolish physical cash and apply negative interest rates Helicopter money : New money paid to every citizen

66 BLOCKCHAIN / DISTRIBUTED LEDGER January 2016

67 BLOCKCHAIN / DISTRIBUTED LEDGER Already possible to issue digital cash with BoE s existing technology January 2016

68 BLOCKCHAIN / DISTRIBUTED LEDGER Already possible to issue digital cash with BoE s existing technology Is blockchain / DL: January 2016

69 BLOCKCHAIN / DISTRIBUTED LEDGER Already possible to issue digital cash with BoE s existing technology Is blockchain / DL: More resilient? January 2016

70 BLOCKCHAIN / DISTRIBUTED LEDGER Already possible to issue digital cash with BoE s existing technology Is blockchain / DL: More resilient? January 2016 More efficient?

71 BLOCKCHAIN / DISTRIBUTED LEDGER Already possible to issue digital cash with BoE s existing technology Is blockchain / DL: More resilient? January 2016 More efficient? Faster?

72 BLOCKCHAIN / DISTRIBUTED LEDGER Already possible to issue digital cash with BoE s existing technology Is blockchain / DL: More resilient? January 2016 More efficient? Faster? Secure?

73 BLOCKCHAIN / DISTRIBUTED LEDGER Already possible to issue digital cash with BoE s existing technology Is blockchain / DL: More resilient? January 2016 More efficient? Faster? Secure?

74 Distributed Ledger / blockchain RSCoin

75 Distributed Ledger / blockchain RSCoin UCL researchers, in discussion with BoE Digital Currency team

76 Distributed Ledger / blockchain RSCoin UCL researchers, in discussion with BoE Digital Currency team Central bank would control money supply

77 Distributed Ledger / blockchain RSCoin UCL researchers, in discussion with BoE Digital Currency team Central bank would control money supply Limited number of distributed processors (probably authorised banks) process transactions

78 Distributed Ledger / blockchain RSCoin UCL researchers, in discussion with BoE Digital Currency team Central bank would control money supply Limited number of distributed processors (probably authorised banks) process transactions 2,000 transactions per second (vs. 7 for Bitcoin)

79 Distributed Ledger / blockchain

80 Distributed Ledger / blockchain Key question: Who gets access to distributed ledger money?

81 Distributed Ledger / blockchain Key question: Who gets access to distributed ledger money? Only banks? (like now)

82 Distributed Ledger / blockchain Key question: Who gets access to distributed ledger money? Only banks? (like now) All payment providers and financial companies? (Better)

83 Distributed Ledger / blockchain Key question: Who gets access to distributed ledger money? Only banks? (like now) All payment providers and financial companies? (Better) All citizens? (Full reserve digital cash!)

84 LEARN MORE SectionName

85 LEARN MORE POSITIVEMONEY.ORG/digital-cash SectionName