Posted 02/24/2019 5:45 pm
The 1,000-franc note, will be presented on 5 March 2019 and enter circulation on 13 March 2019 according to a press release last August.
In discussions of the larger social implications of banknotes, we sometimes forget that seignorage from banknotes is the source of funding for the central bank. With Sweden having circulating banknotes at 49.948 billion SEK = USD$5.345 billion there is a serious revenue shortage for the Swedish central bank (the Riksbank).
Circulating another $5 billion in central bank digital currency (CBDC) will result in higher seignorage for the Riksbank than the banknotes, since the purchase and maintenance of the banknote system will require higher costs. The revenue from the new CBDC will probably make it easier for the Riksband to operate.
Some nations may have much more ambitious goals than the relatively modest ones proposed by Sweden for its CBDC.
Switzerland already has the highest amount of cash per inhabitant in circulation (measured by USD equivalent). The last series of banknotes spanned 20 year period that began when banknotes had to be backed by gold (a constitutional requirement) to the present day when they are a popular store of value by foreign citizens. The new banknote will follow the trend of removing portraits, which will make them even more popular to foreigners. I suspect that in the post bitcoin world a Swiss central bank digital currency will be popular around the world as a safe haven investment. The banknotes will be helpful to the investor that doesn't mind having 50,000 Swiss francs in digital currency, but would like to have a 1000 Swiss franc banknote to show his friends.
The Swiss federal government has revenue of about 70 billion Swiss Francs. So if the central bank can increase the circulation of an extra 70 million thousand Franc notes to foreigners, then they would have to collect taxes that year and could still pay for the government. That level of circulation may not be possible, but I don't think people envisioned bitcoins as being in circulation at that level either.
In discussions of the larger social implications of banknotes, we sometimes forget that seignorage from banknotes is the source of funding for the central bank. With Sweden having circulating banknotes at 49.948 billion SEK = USD$5.345 billion there is a serious revenue shortage for the Swedish central bank (the Riksbank).
Circulating another $5 billion in central bank digital currency (CBDC) will result in higher seignorage for the Riksbank than the banknotes, since the purchase and maintenance of the banknote system will require higher costs. The revenue from the new CBDC will probably make it easier for the Riksband to operate.
Some nations may have much more ambitious goals than the relatively modest ones proposed by Sweden for its CBDC.
Switzerland already has the highest amount of cash per inhabitant in circulation (measured by USD equivalent). The last series of banknotes spanned 20 year period that began when banknotes had to be backed by gold (a constitutional requirement) to the present day when they are a popular store of value by foreign citizens. The new banknote will follow the trend of removing portraits, which will make them even more popular to foreigners. I suspect that in the post bitcoin world a Swiss central bank digital currency will be popular around the world as a safe haven investment. The banknotes will be helpful to the investor that doesn't mind having 50,000 Swiss francs in digital currency, but would like to have a 1000 Swiss franc banknote to show his friends.
The Swiss federal government has revenue of about 70 billion Swiss Francs. So if the central bank can increase the circulation of an extra 70 million thousand Franc notes to foreigners, then they would have to collect taxes that year and could still pay for the government. That level of circulation may not be possible, but I don't think people envisioned bitcoins as being in circulation at that level either.
Edited by PacoMartin
02/24/2019 6:53 pm
02/24/2019 6:53 pm
