What If Central Banks Issued Digital Currency?

Currency is already digital, and has been for years.  But the basic model of banking is largely unchanged.  This is because the system is based on the notion that digital currency issued by commercial banks is convertible into paper cash, which is a central bank liability.   This paper explores what would happen if central banks started to issue digital currency directly, and idea that China and other countries are currently exploring  Fintech expert Ajay S. Mookerjee believes that it would upend the traditional banking system.  He argues that a switch to Central Bank Digital Currency (CBDC) would be safer for depositors (because CBDC is a direct liability of the issuing central bank, not of a commercial bank), would eliminate the need for commercial banks to directly take deposits from consumers and households, render much of the physical infrastructure of banking redundant,  enable more effective monitoring and regulation of the financial system, and prove more inclusive.  The potential cost savings in the US alone amount to $750 billion a year, as much as the country’s households spend on food.