After a long radio silence on this blog (mea culpa!), it’s time to share some personal news: I have stepped down as Digital Assets Lead of the Cambridge Centre for Alternative Finance (CCAF) and will be transitioning to a purely research-focused advisory role. This will allow me to take some proper (and much-needed) time off while staying involved in cutting-edge research.

For technical and regulatory reasons, CBDC is unlikely to replicate the properties of physical cash – making it all the more important to preserve the latter. CBDC has begun as a technical discussion; now is the time to acknowledge its political dimension and correspondingly initiate a transparent decision process that involves society at large.

CBDC could naturally lead to a bottom-up full reserve banking system where money creation is an exclusive privilege of the state. Creeping centralisation would eventually spill over to the real economy as well, accidentally resulting in an economic system with suboptimal allocation of resources according to political agendas.

CBDC gaining meaningful market share expands the central bank's grip over the monetary system, with significant implications for bank balance sheets, financial risk, and commercial bank funding. During a financial crisis, CBDC may become a flight-to-safety instrument and exacerbate the magnitude of bank runs, causing broader systemic instability.

The magnitude of the power shift from the private to the public sector will depend on the design, implementation, and market reception of CBDC. Failure to gain meaningful usage will result in only marginal changes in the current monetary system, with a theoretical gain of influence over monetary policy being nullified by the current interest rate environment.

The second post in the CBDC series explores the inner workings of our current monetary system to better contextualise where a retail CBDC would fit in. We discuss the different forms of the euro, the hierarchy of money, the illusion of fungibility, and the important role of private credit as a decentralised money management tool.

The ECB has published a new report on a potential CBDC called ‘digital euro’. As part of a short series, this blog post explores what CBDC is really about – and what it’s not.

The Fed is massively expanding its balance sheet. However, is it really accurate to claim that the Fed is flooding the system with newly-created money? Yes and no.

Today, I'm very excited to share that I am launching Paradigma, a new company that provides educational and advisory services focused on digital assets and distributed consensus systems.

tl;dr: JPM Coin is an internal accounting system for the settlement of institutional customer accounts. It's not a cryptocurrency nor a stablecoin, and the effective use of "blockchain" beyond its catalyst role remains unclear to date. However, it represents a long-overdue efficiency improvement in cross-border payments that may trigger further advances in core banking infrastructure.

tl;dr: Cryptocurrencies have been designed to provide censorship resistance - the ability to do things others wouldn't let you do. This property comes at a substantial cost, which may outweigh the benefits for many use cases.