A Central Bank “cryptocurrency”? An interesting idea, but maybe not for the reason we think

The retail use-cases get all the press… but the killer-app for digital central bank money might be smart contracts

This post on a concept called “FedCoin” by David Andolfatto of the St Louis Fed raises the really interesting possibility of a world with central-bank-issued digital assets which can be held by a broad range of people.

Andolfatto’s FedCoin post

The core idea is essentially a variation on the digital cash theme: a digital bearer asset that is redeemable for dollars. So, on the surface, just like m-pesa but for dollars, right?

Not quite. Because Andolfatto’s FedCoin idea has two important differences.

• First, FedCoin would be issued by the central bank. That contrasts with most other digital cash systems, where the holder has a claim against a telecoms firm or a commercial bank. In those systems, you have to trust the central bank not to inflate away the currency (as…