A Public Option for Bank Accounts (Or Central Banking for All)
40 Pages Posted: 7 Jun 2018 Last revised: 26 Jan 2019
Date Written: December 2, 2018
This paper argues that restricting central bank accounts to an exclusive clientele (banks) is no longer justifiable on policy grounds if indeed it ever was. We propose giving the general public—individuals, businesses, and institutions—the option to hold accounts at the central bank, which we call FedAccounts. FedAccounts would offer all the functionality of ordinary bank accounts with the exception of overdraft coverage. They would also have all the special features that banks currently enjoy on their central bank accounts, as well as some additional, complementary features. Government-issued physical currency is already an open-access resource, available to all; the FedAccount program would merely do the same for nonphysical or “account” money. The FedAccount program would bring genuinely transformational change to the monetary-financial system, in ways both obvious and unexpected.
Keywords: banking, central banking, payments
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