Won't the ICAs idea face similar challenges like S&P, Moody's did during the housing bubble? S&P and Moody ended up grading up the bonds (used as a catch all term) because they feared that the other one would be all too eager to give the higher rating. Won't similar dynamics evolve here?
PS: There is a scene in The Big Short showing this.
Hi RSJ and Pranay, great newsletter once again. Just a small thing, when you are making a matrix such as the one based on China’s Gilded Age: The Paradox of Economic Growth and Vast Corruption, it is better to show no arrows on the apparent x and y axes because a matrix doesn't have axes. The arrows give the impression that this is a graph but it isn't because on y axis you aren't moving along a fixed quantifiable variable i.e. you cannot quantify "What do you get in return?". Just a minor quibble by a scientist :)
Central banks, in such a scenario, can issue currency that has expiry dates, can attach conditions on spending/receiving it. CBDCs can then be used for directly increasing/decreasing the money supply, managing inflation, etc. It can incentivise or disincentivise people to consume/save/invest or what/when/where to consume/save/invest. It can manage people at large, can control behaviour. How do you look at such an extreme situation?
The CBDC requires internet and a smartphone for the Central Bank to transfer it to people bypassing banks right? In that case, the rural/gender digital divide also a matter of concern?
And can I envision the central bank with CBDC as a large Govt Bank which directly deals with the end-users, be it people or companies?
Hi Pranay,
Won't the ICAs idea face similar challenges like S&P, Moody's did during the housing bubble? S&P and Moody ended up grading up the bonds (used as a catch all term) because they feared that the other one would be all too eager to give the higher rating. Won't similar dynamics evolve here?
PS: There is a scene in The Big Short showing this.
Hi RSJ and Pranay, great newsletter once again. Just a small thing, when you are making a matrix such as the one based on China’s Gilded Age: The Paradox of Economic Growth and Vast Corruption, it is better to show no arrows on the apparent x and y axes because a matrix doesn't have axes. The arrows give the impression that this is a graph but it isn't because on y axis you aren't moving along a fixed quantifiable variable i.e. you cannot quantify "What do you get in return?". Just a minor quibble by a scientist :)
Hi RSJ,
Central banks, in such a scenario, can issue currency that has expiry dates, can attach conditions on spending/receiving it. CBDCs can then be used for directly increasing/decreasing the money supply, managing inflation, etc. It can incentivise or disincentivise people to consume/save/invest or what/when/where to consume/save/invest. It can manage people at large, can control behaviour. How do you look at such an extreme situation?
Hi RSJ,
The CBDC requires internet and a smartphone for the Central Bank to transfer it to people bypassing banks right? In that case, the rural/gender digital divide also a matter of concern?
And can I envision the central bank with CBDC as a large Govt Bank which directly deals with the end-users, be it people or companies?