Why Central Bank Money Matters?
Central bank money is the only ‘safe money and a risk-free means of payment to households, businesses and the wider financial system’ (Bank of England), the sole ‘ultimate safe asset, base money’ (ECB), and the unique safe form of money, with no chance of default, and [is] important in daily payment and settlement’ (Bank of Japan). ‘Central bank money is issued by, and forms a claim on, the central bank, that is ultimately the central government’ (Sveriges Riksbank).
Central bank money, or base money, is comprised of cash – mainly banknotes – and non-cash deposits, or reserves. The public don’t have access to bank deposits, while banks can make use of all the forms of this safe money. But the emerging cashless society will mean members of the public soon won’t be able to access even cash. If the public’s access to it is cut, central bank money would lose its risk-free status, and reserves would remain private bank money. There would only be private money.
Obviously, technologically superior payment methods have been irrevocably squeezing out traditional banknotes. Most consumers and merchants understandably prefer to use these means of payment due to their convenience. The crucial issue is that the disappearance of banknotes will mean the end of risk-free money for the public, the only money with stable nominal value. Without banknotes, £10 will not always be £10, €10 will not remain €10, and $10 will not stay $10. If they disappear, so does the genetic code of money, something that corporate issuers cannot replicate
Therefore is important preserve of public money
Stable prices of goods, services, and real and financial assets are unthinkable without nominally stable money. Losing cash would mean losing the unit of account – the nominal anchor of both the economy and society. Unless a majority of people support banknotes, they will inevitably disappear due to the negative network effect.
The digital revolution isn’t a threat to money, since money itself first appeared as an extraordinary technological innovation. What does bring money into question, however, is attempts to change its characteristics using technology and create ‘new issuers’. That’s why it’s extremely important to keep banknotes in use.
Independent research
Money is too important for any individual and the society, to remain entwined only in the net of institutional research. That’s why this web site showcases the results of our research, which aims to contribute to a better understanding of the latest developments and issues connected with the issuance of money, its circulation, functions, and digital transformation, and payment services.
The findings of our research are presented as short essays, written in an approachable style, with only the required minimum of technical terminology. The subjects for these articles are chosen by how topical they are and how much they affect our day-to-day lives. This is why so many of the essays date from between January and April of 2020. The fallout from Covid-19 has been an obvious choice: a piece devoted to the pandemic follows immediately after the introductory article.
Themes
Money in the time of coronavirus
Abolition of cash or loss of anchor
Negative nominal interest rates
Disclosure of Anonymity in Modern Payments
The perception of people about their money and digital euro
We start with the mother of all monetary topics: the rapid disappearance of central bank money for the public. If you can’t use cash anywhere you regularly go – down the shops, at the pub, or at the hairdresser’s – you’ll find cash obsolete, too. Central bank money for the public will have gone. And this’ll mean authentic money will have disappeared as well, because no digital cash substitute possesses the key characteristics of cash: safety, accessibility, transferability (person-to-person), finality, privacy, independence and instantaneity.
For further information about the current questions about money and payments, see the discussion papers below.
The illusion of paper money as ‘the dominant means of payment’
CBDC as a Solution for Billions of Unbanked People
Hammurabi vs cryptocurrencies: anonymity of payments
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Objectivity
Finally, we’re convinced that impartiality is of the utmost importance, as it shields the researcher from the influence of private individuals, institutions, and funders. Our research is not funded or supported by any other means by any central or commercial bank or banking group, payments company or platform, or any other institution, either public or private, national or international.
Keep your money in your hands
(Epigram for Wall Street)
Biggest secrets of money world
© Central Bank Money Research. All rights reserved. You may copy the essays, either in whole or in part, as long as you explicitly credit the source as Central Bank Money Research. You must also e-mail us the date and place where you used materials from this web site at office@CBMresearch.info
‘The federal Reserve Board of Friday announced it has withdrawn from the Network of Central Banks and Supervisors for Greening the Financial System (NGFS). While the Board has appreciated the engagement with the NGFS and its members, the work of the NGFS has increasingly broadened in scope, covering a wider range of issues that are outside of the Board’s statutory mandate’ (The Federal Reserve Board, January 17, 2025).
‘The Federal Reserve Act was enacted more than a century ago. Under the law, the Federal Reserve was made accountable to Congress but also was specifically designed to carry out its responsibilities without interference or control from the vested interests inherent in electoral politics, fiscal policymaking, and private banking. In short, the Fed was created as an independent central bank’ (Federal Reserve Independence and Accountability, FRB of Richmond, updated January 17, 2025).