“People would convert a very large share of their current bank deposits into official digital money, in effect taking them out of the private banking system. Why might this be a problem? If it’s an acute rush for safety in a crisis, the risk is that private banks may not have enough reserves to honour all the withdrawals. ”
This is a good thing since the new reserves needed could be equally distributed to all adult citizens and thereby reverse a lot of relative wealth inequality.
<i>There is an important distinction to be made between official electronic currency – allowing everyone to hold an account with the central bank —</i>
Has it not occurred to you as noxious that citizens may not deal with their nation’s fiat in the form of inherently risk-free, convenient accounts at the central bank itself but must work through a government-privileged usury cartel consisting of depository institutions who alone in the private sector may have such accounts?
Cui bono from that special privilege if not the banks themselves and the most so-called creditworthy, the rich?