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Central Banking for All: A Public Option for Bank Accounts

June 20, 2018

Among the perks of being a bank is the privilege of holding an account with the central bank. Unavailable to individuals and nonbank businesses, central bank accounts pay higher interest than ordinary bank accounts. Payments between these accounts clear instantly; banks needn’t wait days or even minutes for incoming payments to post. On top of that, central bank accounts are pure money economically equivalent to dollar bills meaning they are fully sovereign and non defaultable no matter how large the balance. By contrast, federal deposit insurance for ordinary bank accounts maxes out at $250,0001 a big problem for institutions with large balances.

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Central Banking for All: A Public Option for Bank Accounts