Tim Bouma on Nostr: BTW, the banks (not the central banks) hate the M0 layer (banknotes), because it ...

BTW, the banks (not the central banks) hate the M0 layer (banknotes), because it forces them to hold dirty cash in their safes and convert their liabilities (M1) into M0 which can be used outside their payment system. Banks also hate CBDCs because it disintermediates people from their systems, and enables people to be direct deposit holders of with the central bank.

I was never a fan of CBDCs, but CBDCs still could be the lesser evil to the existing payment systems. I have always been aware that opposition to CBDCs could play into something far worse, total surveillance payment systems.

Fortunately, we have the exit option of bitcoin, and I firmly believe we can build a universal payment system using Lightning and ecash. This will make CBDCs, stablecoins, and eventually all fiat currencies moot.

quoting note16aw…thwm

This diagram of the Bank of Canada balance sheet shows what happened in early 2020. The greyish curve is banknotes (M0’ in circulation, a steady uptick from the 90s from about $25B to 2024 of about $125B. Then boom, at the outset of the pandemic, the yellowish curve, liabilities to banks shot up to $400B. That is the sudden M1 expansion due to the government issuing debt, the central bank buying that debt, and the government holding this newly converted debt as ‘cash’ deposits in banks for injecting into the economy as emergency funding. We all know how that played out - pump $400B worth of spending power into the economy that is shut down, the money goes after immovable assets, namely real estate.