Varoufakis’s questionable ideas on CBDC.

 

The questionable ideas are in an article of his entitled “Why the Bank of England should give everyone a free account”.

His first claim is that “In times of trouble, such as the current pandemic, the Bank of England could lift all boats at once by crediting your account directly…”. Well I suggest the decision as to who gets stimulus money is very much a POLITICAL decision (as Positive Money has argued since its foundation) and not a decision for central banks.

Second, why should everyone be entitled to a FREE account at the central bank, or any other bank, come to that? Making something free at the point of delivery is OK where there are overriding social considerations at stake. For example making basic education free (and indeed compulsory) for kids is widely accepted as a good idea because being able to read, write and do basic maths is a gift which no child should go without. Likewise, there are good arguments for making basic health-care free at the point of delivery, which explains why basic health-care is available for free in many countries.

But is a bank account a basic human right? Given that anyone can do their basic financial transactions (purchase of food, paying the rent etc) using PHYSICAL cash (£10 notes, $100 bills etc) why is a bank account a basic essential? Maybe at some point a majority of shops will refuse to take physical money and will insist on payment via debit or credit cards. But we are not at that point yet.