cbdc:public:cbdc_omg:04_doc:20_comments:brp:q05:start
Differences
This shows you the differences between two versions of the page.
| Both sides previous revision Previous revision Next revision | Previous revision | ||
|
cbdc:public:cbdc_omg:04_doc:20_comments:brp:q05:start [2022/04/27 22:09] nick [How could a CBDC affect financial stability?] |
cbdc:public:cbdc_omg:04_doc:20_comments:brp:q05:start [2022/06/17 18:49] (current) terrance |
||
|---|---|---|---|
| Line 1: | Line 1: | ||
| ====== Question: 05. How could a CBDC affect financial stability? Would the net effect be positive or negative for stability? ====== | ====== Question: 05. How could a CBDC affect financial stability? Would the net effect be positive or negative for stability? ====== | ||
| - | [[cbdc:private:cbdc_omg:04_doc:20_comments:brp:start| Return to CBDC Benefits, Risks, and Policy Considerations ]] | + | |< 100% >| |
| + | | [[cbdc:public:cbdc_omg:04_doc:20_comments:brp:start| Return to CBDC Benefits, Risks, and Policy Considerations ]] | <WRAP> | ||
| + | <html><b> | ||
| + | <a href="mailto:[email protected]?Subject=OMG's CBDC WG Response: | ||
| + | Question: 05. How could a CBDC affect financial stability? Would the net effect be positive or negative for stability? | ||
| + | ">Provide Feedback</a></b> | ||
| + | </html> | ||
| + | </WRAP> | | ||
| ===== Question ===== | ===== Question ===== | ||
| - | [[cbdc:private:cbdc_omg:04_doc:20_comments:brp:q05:start| Return to Top]] | + | [[cbdc:public:cbdc_omg:04_doc:20_comments:brp:q05:start| Return to Top]] |
| - **How could a CBDC affect financial stability?** | - **How could a CBDC affect financial stability?** | ||
| Line 10: | Line 17: | ||
| ===== Answer ===== | ===== Answer ===== | ||
| - | [[cbdc:private:cbdc_omg:04_doc:20_comments:brp:q05:start| Return to Top]] | + | [[cbdc:public:cbdc_omg:04_doc:20_comments:brp:q05:start| Return to Top]] |
| ==== Overview ==== | ==== Overview ==== | ||
| - | [[cbdc:private:cbdc_omg:04_doc:20_comments:brp:q05:start| Return to Top]] | + | [[cbdc:public:cbdc_omg:04_doc:20_comments:brp:q05:start| Return to Top]] |
| To answer these questions, it is important to first have a good working definition of **Financial Stability**. | To answer these questions, it is important to first have a good working definition of **Financial Stability**. | ||
| Line 39: | Line 46: | ||
| ==== How could a CBDC affect financial stability? ===== | ==== How could a CBDC affect financial stability? ===== | ||
| - | [[cbdc:private:cbdc_omg:04_doc:20_comments:brp:q05:start| Return to Top]] | + | [[cbdc:public:cbdc_omg:04_doc:20_comments:brp:q05:start| Return to Top]] |
| Line 45: | Line 52: | ||
| <figure propOfInstab> | <figure propOfInstab> | ||
| - | {{ :cbdc:private:cbdc_omg:04_doc:20_comments:brp:q05:screen_shot_2022-04-27_at_11.03.53_am.png?700 |}} | + | {{ cbdc:04_doc:20_comments:brp:q05:screen_shot_2022-04-27_at_11.03.53_am.png?700 |}} |
| <caption>Propagation of Financial Instability in Industrialized Countries(( | <caption>Propagation of Financial Instability in Industrialized Countries(( | ||
| Frederic S. Mishkin, | Frederic S. Mishkin, | ||
| Line 57: | Line 64: | ||
| === Increase in Uncertainty === | === Increase in Uncertainty === | ||
| - | [[cbdc:private:cbdc_omg:04_doc:20_comments:brp:q05:start| Return to Top]] | + | [[cbdc:public:cbdc_omg:04_doc:20_comments:brp:q05:start| Return to Top]] |
| : //For a nation’s economy to function effectively, its **citizens must have confidence in its money and payment services**. The Federal Reserve, as the nation’s central bank, works to maintain the public’s confidence by fostering monetary stability, financial stability, and a safe and efficient payment system.// | : //For a nation’s economy to function effectively, its **citizens must have confidence in its money and payment services**. The Federal Reserve, as the nation’s central bank, works to maintain the public’s confidence by fostering monetary stability, financial stability, and a safe and efficient payment system.// | ||
| Line 63: | Line 70: | ||
| The part of the statement that //"citizens must have confidence in its money and payment services"// emphasizes one of the triggers described by Rosengren's Model, //"Increase In Uncertainty"//. | The part of the statement that //"citizens must have confidence in its money and payment services"// emphasizes one of the triggers described by Rosengren's Model, //"Increase In Uncertainty"//. | ||
| - | Some of the "Uncertainty" introduced by a U.S. CBDC to the financial system have been defined by the **White Paper** and already discussed in [[cbdc:private:cbdc_omg:04_doc:20_comments:brp:q10:start]]. | + | Some of the "Uncertainty" introduced by a U.S. CBDC to the financial system have been defined by the **White Paper** and already discussed in [[cbdc:public:cbdc_omg:04_doc:20_comments:brp:q10:start]]. |
| <table> | <table> | ||
| Line 73: | Line 80: | ||
| </WRAP>| | </WRAP>| | ||
| ^ R0005 ^ New payment services could pose Risks to: <WRAP> | ^ R0005 ^ New payment services could pose Risks to: <WRAP> | ||
| - | - financial stability | + | : 1. financial stability |
| - | - payment system integrity | + | : 2. payment system integrity |
| - | - other **Risks** | + | : 3. other **Risks** |
| </WRAP>|<WRAP> | </WRAP>|<WRAP> | ||
| If there is a major hack to the CBDC, this could trigger a “lack of confidence” not just in the CBDC, but in the U.S. Dollar and perhaps The Federal Reserve. | If there is a major hack to the CBDC, this could trigger a “lack of confidence” not just in the CBDC, but in the U.S. Dollar and perhaps The Federal Reserve. | ||
| Line 81: | Line 88: | ||
| </table> | </table> | ||
| - | In addition, many additional risks to the "Uncertainty" introduced by a U.S. CBDC to the financial system have already been discussed in Answer to [[cbdc:private:cbdc_omg:04_doc:20_comments:brp:q11:start]]: | + | In addition, many additional risks to the "Uncertainty" introduced by a U.S. CBDC to the financial system have already been discussed in Answer to [[cbdc:public:cbdc_omg:04_doc:20_comments:brp:q11:start]]: |
| - | <nspages cbdc:private:cbdc_omg:04_doc:20_comments:brp:q11: -tree -r -exclude -subns -pagesInNs -h1 -textNs=""> | + | <nspages cbdc:public:cbdc_omg:04_doc:20_comments:brp:q11: -tree -r -exclude -subns -pagesInNs -h1 -textNs=""> |
| === Deterioration in banks’ Balance Sheets === | === Deterioration in banks’ Balance Sheets === | ||
| - | [[cbdc:private:cbdc_omg:04_doc:20_comments:brp:q05:start| Return to Top]] | + | [[cbdc:public:cbdc_omg:04_doc:20_comments:brp:q05:start| Return to Top]] |
| - | Table {{ref>otherQ}} lists some highlights from some other Answers the OMG members have already answered. regarding //"Deterioration in banks’ Balance Sheets"//. | + | Table {{ref>otherQ}} lists some highlights from some other Answers the OMG's CBDC WG members have already answered. regarding //"Deterioration in banks’ Balance Sheets"//. |
| <table otherQ> | <table otherQ> | ||
| - | <caption>Potential deterioration in banks’ Balance Sheets are already covered by OMG answers to these Questions.</caption> | + | <caption>Potential deterioration in banks’ Balance Sheets are already covered by OMG's CBDC WG answers to these Questions.</caption> |
| - | * [[cbdc:private:cbdc_omg:04_doc:20_comments:brp:q04:start]] | + | * [[cbdc:public:cbdc_omg:04_doc:20_comments:brp:q04:start]] |
| - | * [[cbdc:private:cbdc_omg:04_doc:20_comments:brp:q06:start]] | + | * [[cbdc:public:cbdc_omg:04_doc:20_comments:brp:q06:start]] |
| - | * [[cbdc:private:cbdc_omg:04_doc:20_comments:brp:q14:start]] | + | * [[cbdc:public:cbdc_omg:04_doc:20_comments:brp:q14:start]] |
| </table> | </table> | ||
| ==== Would the net effect be positive or negative for stability? ===== | ==== Would the net effect be positive or negative for stability? ===== | ||
| - | [[cbdc:private:cbdc_omg:04_doc:20_comments:brp:q05:start| Return to Top]] | + | [[cbdc:public:cbdc_omg:04_doc:20_comments:brp:q05:start| Return to Top]] |
| === Overview === | === Overview === | ||
| - | [[cbdc:private:cbdc_omg:04_doc:20_comments:brp:q05:start| Return to Top]] | + | [[cbdc:public:cbdc_omg:04_doc:20_comments:brp:q05:start| Return to Top]] |
| - | As the question states, there are positives and negatives on both sides. The OMG's answers to a couple of the **White Paper** have already addressed some of these issues. Obviously, the overall goal is to have overwhelmingly more positives than negatives. AT this point negatives and positives are purely speculative without further understanding of exactly what the U.S. CBDC will be. | + | As the question states, there are positives and negatives on both sides. The OMG's CBDC WG answers to a couple of the **White Paper** have already addressed some of these issues. Obviously, the overall goal is to have overwhelmingly more positives than negatives. AT this point negatives and positives are purely speculative without further understanding of exactly what the U.S. CBDC will be. |
| - | For example, in the "desirements" identified by [[https://www.omg.org/ | Object Management Group ]] from the [[https://www.federalreserve.gov/publications/files/money-and-payments-20220120.pdf | White Paper]] and summarized in the [[cbdc:private:cbdc_omg:04_doc:12_summary:start| White Paper Analysis]] are used as the basis for the ambivalent answer. From the "desirements", it appears that there are two main sets of requirements when it comes to determining potential interest payments. Each of the sets is dependent on how the CBDC is to be modeled: | + | For example, in the "desirements" identified by [[https://www.omg.org/ | Object Management Group's ]] CBDC WG from the [[https://www.federalreserve.gov/publications/files/money-and-payments-20220120.pdf | White Paper]] and summarized in the OMG's CBDC WG [[cbdc:public:cbdc_omg:04_doc:12_summary:start| White Paper Analysis]] are used as the basis for the ambivalent answer. From the "desirements", it appears that there are two main sets of requirements when it comes to determining potential interest payments. Each of the sets is dependent on how the CBDC is to be modeled: |
| * **Cash Model** - these are requirements with CBDC characteristics most closely aligned with a simple cash model | * **Cash Model** - these are requirements with CBDC characteristics most closely aligned with a simple cash model | ||
| Line 113: | Line 120: | ||
| === Summary === | === Summary === | ||
| - | [[cbdc:private:cbdc_omg:04_doc:20_comments:brp:q05:start| Return to Top]] | + | [[cbdc:public:cbdc_omg:04_doc:20_comments:brp:q05:start| Return to Top]] |
| - | In summary, determining the "positives" and "negatives" is dependent on the management of the U.S. CBDC Systems Engineering process, how well it is monitored and how well it can adapt over time. **Note:** One stakeholder's positive is another stakeholder's negative. For example, abiding by the [[cbdc:private:cbdc_omg:04_doc:15_common:45_privacy:start | Privacy Laws and Regulations]] is highly desirable from the End User perspective, but not from Law Enforcement. | + | In summary, determining the "positives" and "negatives" is dependent on the management of the U.S. CBDC Systems Engineering process, how well it is monitored and how well it can adapt over time. **Note:** One stakeholder's positive is another stakeholder's negative. For example, abiding by the [[cbdc:public:cbdc_omg:04_doc:15_common:45_privacy:start| Privacy Laws and Regulations]] is highly desirable from the End User perspective, but not from Law Enforcement. |
| /**=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=- | /**=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=- | ||
cbdc/public/cbdc_omg/04_doc/20_comments/brp/q05/start.1651111799.txt.gz · Last modified: 2022/04/27 22:09 by nick
