Monetary Sovereignty and Central Bank Digital Currency
DOI:
https://doi.org/10.35551/PFQ_2022_4_4Keywords:
monetary sovereignty, central bank digital currency, chartalism, monetary policy, financial stability, B52, E5, E63, F3Abstract
The effective monetary sovereignty of a state is the ability of the state to use monetary instruments to achieve its economic policy objectives. This notion goes beyond the conceptualisation of the traditional Westphalian sovereignty of interference-free discretion, which is necessary because of the hierarchical operational complexity of the fiat and credit money systems in the modern financial system. At the same time, the monetary challenges of the 21st century may also erode the effective monetary sovereignty of states, which can, however, be partially rescued through the introduction of digital central bank money. The paper therefore explores different areas of the impact of digital central bank money on effective monetary sovereignty, taking chartalist monetary theory as a starting point. It shows how central bank digital currency may achieve an improvement in these areas of effective monetary sovereignty.
References
Ábel, I., Lehmann, K., Tapaszti, A. (2016). A bankok ellentmondásos kezelése a makroökonómiában, Hitelintézeti Szemle, 15. évf. 2. szám, 2016. június, 33–58. oldal
Arrighi, G. (2010). The Long Twentieth Century – Money, Power and the Origins of Our Times. Verso kiadó, 2010, ISBN: 1844673049
Bindseil, U. (2020). Tiered CBDC and the financial system. ECB WP Series No. 2351 /January,2020. Online: https://www.ecb.europa.eu/pub/pdf/scpwps/ecb.wp2351~c8c18bbd60.en.pdf
Bjerg, O., McCann, D., Macfarlane, L., Nielsen, R. H., Ryan-Collins, J. (2017). Seigniorage in the 21st Century: A Study of the Profits from Money Creation in the United Kingdom and Denmark, http://dx.doi.org/10.2139/ssrn.2921225
Brooks, S. (2021). Revisiting the Monetary Sovereignty Rationale for CBDCs, Staff Discussion Paper/Document d’analyse du personnel — 2021- 17, Online: https://www.bankofcanada.ca/wpcontent/uploads/2021/12/sdp2021-17.pdf
Brunnermeier M., James H., Landau J. (2019). The Digitalization of Money. NBER Working Paper No. 26300
Brunnermeier, M., Landau, J. (2022). The digital euro: policy implications and perspectives. Policy Department for Economic, Scientific and Quality of Life Policies, Directorate-General for Internal Policies, PE 703.337 – January 2022. Online: https://www.europarl.europa.eu/RegData/etudes/STUD/2022/703337/IPOL_STU(2022)703337_EN.pdf
Cohen, B. (1998). The Geography of Money. Cornell University Press, 1998, Ithaca and London
Croxton, D. (1999). The Peace of Westphalia of 1648 and the Origins of Sovereignty, The International History Review, 21:3, pp.569–591, https://doi.org/10.1080/07075332.1999.9640869
Jackson, A., Dyson, B. (2012). Modernising Money. Positive Money, London
Friedman, M. (1971). ‘Government Revenue from Inflation’. The Journal of Political Economy, 1971, 79:4, pp. 846–856
Fuller, E. (2020). A Source Book on Early Monetary Thought Writings on Money Before Adam Smith, Edward Elgar Publishing 2020. Online: https://blackwells.co.uk/bookshop/product/A-Source-Book-on-Early-Monetary-Thought-by-Edward-W-Fuller-editor-Edward-Elgar-Publishing-publisher/9781839109997
Graeber, D. (2011). Debt: The First 5000 years, Melville House Publishing, 2011
Hart, K. (2005). Money – one antropologist’s view, in J. G. Carrier (ed) A Handbook of Economic Anthropology (Cheltenham: Edward Elgar Publishing, 2005), pp. 160–175. Online: https://thememorybank.co.uk/papers/money-oneanthropologists-view/
Horváth G., Horváth B. (2021). Globális készpénz-alternatívák és hatásuk a monetáris politikai implementációra. In: Egy új kor hajnalán, MNB, 2021, 17–44. oldal, Online: https://issuu.com/jegybank/docs/digita_lis_jegybankpe_nz_tanulma_nyko_tet_hun_webes
Horváth, G., Kolozsi, P. (2019). Pénz a digitális korban. In: Virág, B. (szerk.) A jövő fenntartható közgazdaságtana, Magyar Nemzeti Bank (MNB), Budapest. 97–105. oldal
Huang Y. – Mayer, M. (2022). Digital currencies, monetary sovereignty, and U. S.–China power competition. Wiley, Online: https://onlinelibrary.wiley.com/doi/epdf/10.1002/poi3.302
Huber, J. (2017). Sovereign Money. Palgrave Macmillan, London, 2017, https://doi.org/10.1007/978-3-319-42174-2
Huber, J. (2021). The rise of sovereign digital currency (CBDC). Online: https://sovereignmoney.site/dominant-money-ii-the-rise-of-sovereigndigital-currency
Humphrey, C. (1985). Barter and Economic Disintegration, Man New Series, Vol. 20, No. 1 (Mar., 1985), pp. 48–72 (25 pages) https://doi.org/10.2307/2802221
Kissinger, H. (2014). World Order, Penguin Books, ISBN: 0143127713
Knapp, G. (1905). The state theory of money. Simon Publications Inc., 2003
McLeay, M., Radia, A., Thomas, R., (2014). Money Creation in the Modern Economy. Bank of England Quarterly Bulletin 2014 Q1. Online: https://ssrn.com/abstract=2416234
Murau, S., van't Klooster, J. (2020). Rethinking Monetary Sovereignty: The Global Credit Money System and the State. https://doi.org/10.31235/osf.io/k9qm8
Panetta, F. (2022). Contribution by Fabio Panetta, Member of the Executive Board of the ECB, to a panel discussion on central bank digital currencies at the US Monetary Policy Forum, 2022. február 18. Online: https://www.ecb.europa.eu/press/key/date/2022/html/ecb.sp220218_1~938e881b13.en.html
Tcherneva, P. (2016). Money, Power, and Monetary Regimes. Levy Insititute Working paper 861. Online: https://www.levyinstitute.org/publications/money-power-and-monetary-regimes
Bank of International Settlements (2021). Covid–19 accelerated the digitalisation of payments.Online: https://www.bis.org/statistics/payment_stats/commentary2112.htm
Bank of International Settlements (2018). Central bank digital currencies, Committee on Payments and Market Infrastructures. Online: https://www.bis.org/cpmi/publ/d174.pdf
FED (2022). Federal Reserve – Money and Payments: The U.S. Dollar in the Age of Digital Transformation, 2022. Online: https://www.federalreserve.gov/publications/files/money-andpayments-20220120.pdf
IMF (2006). Current Legal Aspects of Monetary Sovereignty in IMF Publications 2006. Online: https://www.imf.org/external/pubs/nft/2006/cdmf/ch1law.pdf
IMF (2022). Buetzer S. – Advancing the Monetary Policy Toolkit through Outright Transfers. Working Paper No. 2022/087. Online: https://www.imf.org/en/Publications/WP/Issues/2022/05/06/Advancingthe-
Monetary-Policy-Toolkit-through-Outright-Transfers-517641
Riksbank (2022a). Sveriges Riksbank – E-krona Pilot Second phase, 2022 Online: https://www.riksbank.se/en-gb/payments--cash/e-krona/e-kronareports/e-krona-pilot-phase-2/
Riksbank (2022b). Sveriges Riksbank – Stockholms Banco, 2022. Online: https://www.riksbank.se/globalassets/media/riksbanken-350-ar/tidslinjen/stockholm-banco/24-45-stockholms-banco_eng.pdf
Sanddollar (2022). Objectives. Online: https://www.sanddollar.bs/objectives