Declaration of solvency and Defaultable debt: Difference between pages

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imported>Doug Williamson
(Create page - source - BIS - https://www.bis.org/publ/work1086.pdf)
 
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''Law''. 
''Central bank digital currency (CBDC) - government debt - default.''


A statutory declaration made by the directors of a company prior to its winding up or liquidation.
In the context of central bank digital currencies (CBDCs), defaultable debt refers to conventional government debt.


Conventional government debt, the argument goes, is a liability of the government that carries the possibility of default.


The declaration of solvency states that the directors:
By contrast, a CBDC is not defaultable.
#Have made a full enquiry into the affairs of the company, and
 
#Have formed the opinion that the company will be able to pay its debts in full within a period of not more than 12 months from the date on which the winding up or liquidation commences.
 
:<span style="color:#4B0082">'''''CBDC can reduce government financing costs'''''</span>
 
:"CBDC issuance against government debt can reduce government financing costs in two ways.
 
 
:First, by increasing the share of financing that pays the lower interest rate on CBDC.
 
 
:And second, by reducing the outstanding stock of defaultable government debt and thereby reducing all equilibrium interest rates...
 
:As argued by Kumhof et al. (2020), government debt is defaultable and is therefore a liability of the government, while CBDC is not defaultable and is not a liability of the government but rather a hybrid instrument that is closer to equity (in the nation) rather than debt."
 
:''CBDC policies in open economies - BIS Working Paper No 1086 - April 2023 - p24.''.




== See also ==
== See also ==
* [[Liquidation]]
* [[Bank for International Settlements]] (BIS)
* [[Voluntary liquidation]]
* [[Blockchain]]
* [[Winding-up]]
* [[Britcoin]]
* [[Central bank]]
* [[Central bank digital currency]]  (CBDC)
* [[Central bank money]]
* [[Commercial bank money]]
* [[Currency]]
* [[Debt]]
* [[Default]]
* [[Digital currency]]
* [[Digital Dollar Project]]  (DDP)
* [[Digital euro]]
* [[Digital public money]]
* [[Distributed ledger]]
* [[e-krona]]
* [[e-money]]
* [[European System of Central Banks]]
* [[Fiat currency]]
* [[Gilts]]
* [[Gold standard]]
* [[Hybrid ]]
* [[Interest rate]]
* [[Monetary]]
* [[Money]]
* [[Multi-CBDC arrangement]]
* [[Payment Interface Provider]]  (PIP)
* [[Project Icebreaker]]
* [[Project Mariana]]
* [[Retail central bank digital currency]]  (rCBDC)
* [[Sand Dollar]]
* [[Sovereignty]]
* [[Stablecoin]]
* [[Wholesale central bank digital currency]] (wCBDC)
 


[[Category:Compliance_and_audit]]
==Other resource==
* [https://www.bis.org/publ/work1086.pdf CBDC policies in open economies - BIS Working Paper No 1086 - April 2023]

Revision as of 22:42, 29 June 2023

Central bank digital currency (CBDC) - government debt - default.

In the context of central bank digital currencies (CBDCs), defaultable debt refers to conventional government debt.

Conventional government debt, the argument goes, is a liability of the government that carries the possibility of default.

By contrast, a CBDC is not defaultable.


CBDC can reduce government financing costs
"CBDC issuance against government debt can reduce government financing costs in two ways.


First, by increasing the share of financing that pays the lower interest rate on CBDC.


And second, by reducing the outstanding stock of defaultable government debt and thereby reducing all equilibrium interest rates...
As argued by Kumhof et al. (2020), government debt is defaultable and is therefore a liability of the government, while CBDC is not defaultable and is not a liability of the government but rather a hybrid instrument that is closer to equity (in the nation) rather than debt."
CBDC policies in open economies - BIS Working Paper No 1086 - April 2023 - p24..


See also


Other resource

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