[neilwilson]

Normal bank accounts are on the books of the commercial banks. That requires a deposit insurance scheme to make those deposits "money good". Otherwise you end up being an unwitting investor in the bank and subject to losing some or all of your deposit if the bank lends badly.

A digital currency, at least in the terms generally discussed by central banks at the sharp end, moves your bank account to the books of the central bank, so it is always money good without the need for a deposit insurance system. The commercial bank then operates it as agent rather than principal.

There's some other stuff to do with anonymity and quite a lot of hype about distributed ledgers and the like, but largely that is all just marketing BS. The conflict between Money Laundering/Proceeds of Crime tracking requirements and Privacy laws generally stop bearer tokens in their tracks. Bearer Tokens being the direct electronic equivalent of our current folding stuff.

[amadeuspagel]

> Normal bank accounts are on the books of the commercial banks. That requires a deposit insurance scheme to make those deposits "money good". Otherwise you end up being an unwitting investor in the bank and subject to losing some or all of your deposit if the bank lends badly.

> A digital currency, at least in the terms generally discussed by central banks at the sharp end, moves your bank account to the books of the central bank, so it is always money good without the need for a deposit insurance system. The commercial bank then operates it as agent rather than principal.

You can have Fed Accounts[1] without a CBDC.

[1]: https://www.slowboring.com/p/fed-accounts

[landemva]

> That requires a deposit insurance scheme

It doesn't require it, though the existing structure uses this in part to allow banks to take excessive lending risk. It also allows depositors to not care about solvency of the bank.