Visa’s Amazon Blues Will Shape the Digital Cash Debate

This is just a trade-off between a number. Think how the card business of banks could be affected by the emergence of central bank digital currencies or CBDCs. You decide to buy a book on your Kindle with your brand new credit card. Before you draw your line of credit, a lender’s balance sheet – in the words of Stanford University economist Monika Piazzesi – is “empty” and free. (If you use a debit card, the bank will ask you for a deposit and loan assets on the other side of the balance sheet before you buy the book. This will result in additional costs. ) When you pay with credit, the bank creates a deposit in favor of Amazon, automatically backed by an asset: what you owe the bank. This “addition between deposits and lines of credit” has made it cheaper for banks to process these payments, Piazzesi says. Visa’s Amazon Blues Will Shape the Digital Cash Debate


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