We have reached a critical moment in the life of the institution known as a "central bank."
A central bank, as many of you likely know, is paradigmatically a bank that is NOT part of the government that it serves, an institution that has both private and public characteristics, and an institution that serves as the grease for macro-economic gears in the machinery of governance.
Alexander Hamilton, an admirer of the London model, brought the institution to The United States. We now have a rather peculiar form of central bank, the Federal Reserve Board, created by the Wilson administration more than a century ago. Its peculiarities need not interest us today.
But as I said above, we have reached a critical juncture. The central banks of the developed world appear to be running out of their usual arrows. They'll have to come up with something non-traditional when the traditional quiver is empty.
What might that be? They might adopt distributed ledger technology -- that is, they might use bitcoin-style digital currency as a supplement of sorts to the open market operations (which work through the bank accounts of private sector sellers of T-bills) that have long been the central bankers'métier.
The idea is not mine -- it is being bruited about among greybeards and consultancies. There is some
irony in it, though. For many of the enthusiasts of bitcoin, its and its and its imitators are the cure to the disease of state controlled money and the authority of their poohbahs too decide upon its quantity.
The idea, then, that a central bank's own digital currency could be used to provide countercyclical stimulus without some of the impediments that limit ordinary "quantitative easing," in part because it could be injected into the system by means easier that the usual bond-buying open market operations, must be galling.
I have no real point to make, except that the idea is out there, it might be acted upon, and if it is, some of you will have heard it here first.