CBDCs in 1985

For my recent research project, I have been searching for the origins of CBDCs. Some have pointed to a 1985 work by James Tobin, who I met some two decades ago. Sure enough, the idea of a CBDC is there in the form of "Deposited Currency."

When we were learning to work our Commodore 64s, Tobin argued that an electronic "payment like currency but without its disadvantages" was needed. He posited a Deposited Currency issued by a central bank "payable in notes or coin on demand, transferable by order to third parties, secure against loss or theft, [that] would be a perfect store of value in the unit of account."

He put forth both a retail and wholesale model for this proto-CBDC. Individuals could hold this electronic currency in "deposit accounts in the central bank, or in branches of it established for the purpose and perhaps located in post offices." (This is a retail CBDC model and is still heard today with FedAccounts.)

Or, Deposited Currency could be privatized with banks "entitled to hold deposits in the central bank [which] could offer deposited-currency accounts to customers." (This is a two-tiered CBDC model.) And, Deposited Currency would be remunerated.

The article is "Financial Innovation and Deregulation in Perspective."