A proposal for a Smooth Transition from CBDC to Sovereign Money
Critics claim that the introduction of CBDC for general use like the E-krona and even more a complete transition to a Sovereign Money system, will induce financial instability or even a finance crash. And indeed there are risk and problems that need to be cared for. But there is a way to do it.
Lars Alaeus, chair of Positiva Pengar, shows how introduction of the E-krona can be done in a completely smooth way with no financial disturbances. Two new tools for the Riksbank, necessary to achieve this are presented; the “E-conversion credit” and the creation of new money as citizens dividend (or to the state budget).
Even though the E-krona, introduced in this way, will greatly improve the monetary system by itself, a further process, also presented, is needed to neutralize all the negative effects of the current fractional reserve system and to transform the monetary system to a complete Sovereign Money system..
This further process starts with an ‘overnight switch’ which in reality is only the point in time where new laws and regulations comes in place. There are no mandatory switching of money to other accounts over this night. The night is followed by a long period in time (~30 years) where debts and financial bubbles shrinks under full control of the Riksbank. The overnight switch and the following 30-year period will be smooth and include no disturbance in the monetary system and will gradually enhance the stability of the financial system.