From a macroeconomic perspective, central banks can largely neutralise the consequences of CBDC. What is highly uncertain, however, is whether they would choose to do so – the political risks of ‘Reserves for All’ are first-order. The decision for or against CBDC thus should not only reflect the assessment of economic trade-offs, but also whether societies are confident in their ability to efficiently manage conflicts of interest. If not, and if they fear that the introduction of CBDC could further politicise banking and central banking, then the introduction of CBDC might constitute a risky regime change. It will be interesting to see how different [countries] judge this risk.
In the NZZ, Daniel Gerny and Simon Hehli report about potential conflicts of interest at Bern’s university hospital, the Inselspital.
A cardiologist found evidence of negative health effects of in vitro fertilization, which the Inselspital offers. But unusually, the hospital’s PR department didn’t advertize the findings. The motivation to keep quiet, according to the PR department, was that the findings are of relevance also for other groups at the hospital, and that this would have to be taken into account:
Publiziert wurde die Berner Studie im renommierten Fachmagazin «Journal of the American College of Cardiology». Seit Tagen sind die Untersuchungsergebnisse in aller Munde. … Umso erstaunlicher, dass ausgerechnet Scherrers Arbeitgeber, das Inselspital, der Studie keine grosse Beachtung schenkt: Aktiv wird darüber nicht informiert, eine Medienmitteilung ist nicht vorgesehen. Dabei waren sich die Studienautoren sehr wohl bewusst, welche Resonanz ihre Arbeit auslösen würde. Sie machten die Kommunikationsabteilung des Spitals deshalb gezielt und frühzeitig auf ihre Arbeit aufmerksam. Doch diese winkte kurzerhand ab: Im vorliegenden Fall wolle man keine aktive Medienarbeit betreiben, beschied sie in einer Mail, die der NZZ vorliegt. Als Erklärung für diesen Entscheid führt das Inselspital an die Adresse der Forschenden unter anderem an, «dass Ihre Ergebnisse direkt einen anderen Fachbereich der Insel-Gruppe tangieren. Da wir für die gesamte Gruppe die Kommunikation betreiben, müssen wir auch dies berücksichtigen.»
the fact that an international rule is negotiated and accepted by a democratically elected government does not inherently make that rule democratically legitimate.
Rodrik distinguishes two types of international commitments. On the one hand, there are commitments that help to overcome time-inconsistency problems.
[For example, the government] would like to commit to free trade or to fiscal balance, but realizes that over time it will give in to pressure and deviate from what is its optimal policy ex ante. So it chooses to tie its hands through external discipline. This way, when protectionists and big spenders show up at its door, the government says: “sorry, the WTO or the IMF will not let me do it.” Everyone is better off, save for the lobbyists and special interests. This is the good kind of delegation and external discipline.
On the other hand, there are commitments that mainly serve to tie the hands of current or future political opponents.
From an ex-ante welfare standpoint, this strategy has much less to recommend itself. The future government may have better or worse ideas about government policy, and it is not clear that restricting its policy space is a win-win outcome. This kind of external discipline has much less democratic legitimacy because, once again, it privileges one set of interests against others.
In an earlier contribution, I have argued that a key role of the European Union should be to play the former role.