The Silicon Valley Bank fallout makes the case for digital currencies

The Silicon Valley Bank collapse reveals that we still haven't fully learned the lessons from the 2008 financial crisis. A central bank digital currency could provide a means by which businesses could keep cash completely safe, without any need for banks.

March 16, 2023 . 2:50 PM

1 min read

The Silicon Valley Bank (SVB) collapse reveals that we still haven't fully learned the lessons from the 2008 financial crisis.
SVB's bailout of uninsured depositors reflects a policy failure, as it raises questions about the necessity of guaranteeing deposits in full.
The real question SVB throws up is whether we need our financial system to offer an instrument where anyone can store any amount of money with absolute safety.
A central bank digital currency (CBDC) could provide precisely what seems to be missing today: a means by which businesses could keep cash completely safe, without any need for banks.
If the ECB issues a CBDC, any business with liquidity buffers greater than the deposit insurance limit should see the interest in keeping those buffers in digital euros.