, 5 tweets, 2 min read
There's so much wrong with this piece from @tylercowen but I wanted to focus on a few key elements.

1) most CBDC proposals talk about ways of controlling how much CBDC is issued or providing central bank credit to fill in the gap. No inherent reason why CBDC reduces lending 1/N
Now Central Banks may need to revisit their collateral frameworks,as Ulrich Bindseil says in this paper researchgate.net/publication/33…, but they should already be doing that!As my colleague @rohangrey argues, this is an opportunity to revisit our social contract with chartered banks 2/N
2) His discussion of CBDC and online payment processors is completely backwards. Mobile company operators who make payments on behalf of their customers **want** CBDC precisely so they aren't regulated like banks. They don't want to be issuing bank-like IOUs. 3/N
with CBDC, there is essentially "cash" in your "digital wallet" and thus money transmitters will have bailment obligations to their customers and will be regulated as transmitters but will be MORE CLEARLY distinguished from banks (another key point of @rohangrey's research). 4/N
This is an opportunity to more clearly delineate why we are franchising out the ability to create money to financial institutions and for what social purposes. It doesn't have to involve any more centralization than we have now, and can in fact be used to decentralize. 5/5
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