The Central Bank Digital Currency Paradigm Shift

Published on
November 5th, 2020
73 minutes

The Central Bank Digital Currency Paradigm Shift

The Interview ·
Featuring Bill Campbell

Published on: November 5th, 2020 • Duration: 73 minutes

Bill Campbell, portfolio manager for Global Bond Strategy at DoubleLine Capital, sits down with Ed Harrison to discuss how he is making sense of the massive paradigm shift to central bank digital currencies. Campbell argues that central banks are late to the party as over 95% of global transactions are already digital, and together they explore the potential for bilateral digital currency settlement to replace the SWIFT system and put downward pressure on the dollar. They also discuss how CBDCs could upend the banking system as traditional revenue centers like cross border payments and custody of assets are muscled in on by central banks. Campbell also touches on how CBDCs could change the way that fiscal and monetary policy is conducted, leading to even more debasement of fiat money and why he thinks there is still one final move lower for yields left in the bond market. Filmed on October 30, 2020. Bill Campbell has written extensively on the topic and viewers can find links to his two most recent papers here: and Key Learnings: Central bank digital currencies are visible on the horizon, and their roll-out will have a huge effect on how monetary and fiscal policy are conducted, the viability of the banking system as it exists today, and the way that global trade is settled and the value of the U.S. dollar.



  • DM
    David M.
    18 November 2020 @ 10:50
    Why does no one ever mention XRP on Real Vision? For the use case of being a bridge asset between fiat currencies, XRP is preferable to Libra.
    • TS
      Tao S.
      14 December 2020 @ 21:44
      Perhaps it's the huge pre-mine they have in the treasury.
  • TS
    Tao S.
    14 December 2020 @ 21:42
    An excellent semi-Neutral view, pinpointing possibilities in front-running the institutional machine. Really like Campbell's preference for Debit cards over Credit cards. He gets really practical here. Thanks.
  • NS
    Nico S.
    8 December 2020 @ 00:55
    This needs to be a must see for any bond manager. He’s right that CBDC’s will likely invoke higher velocity of money and lead to inflation. It’s just a matter of how quickly CB’s go down this path, test out ‘direct payments’, and eventually use this as the last bastion of increasing growth.
  • AF
    Alan F.
    6 November 2020 @ 02:53
    Fascinating conversation, thank you! Ed, I'm really curious if you all discussed the positioning of the #3 digital asset, XRP, which is specifically designed to facilitate the architecture you all discussed from minutes 54-58. It's ability to settle, WITHOUT counter party risk cross-border is a massive value-add to the whole globe. Many of the advantages of CBDC's for cross border purposes without using XRP would be lost. Usage of this digital asset will free up incredible amounts of capital. Libra, in its conceptual design has flaws in this regard and other existing DA's such as BTC are too slow (7 Transactions per second vs XRP's 1500). I'd love your thoughts on this.
    • JH
      Joseph H.
      6 November 2020 @ 15:25
      I agree 100% would love to hear your thoughts on XRP
    • JW
      Josh W.
      6 November 2020 @ 17:27
      XRP is the giant hot potato elephant in the room! Bitcoin lovers hate it for many reasons (pre-mine, ripple ties, cozying up to banks and regulators) and don’t want to validate it’s existence. Banks and regulators won’t acknowledge it for its disruptive potential, cloud of uncertainty placed over it by unclear regulations, and current legal issues in the U.S. However if you dive into the ripple board members, partnerships, and look at the caliber of what ripple is building...Ripple and XRP are positioned to be a monster in the coming years. Bullish!
    • SV
      Santiago V. | Contributor
      12 November 2020 @ 18:39
      What's not being discussed is the interoperability between payment systems, be they private or public, and how we build the Internet of Value. Currency agnostic protocols will allow for CBDC atomic swaps, use of gateways for pathfinding, and bridge currencies. It's inevitable and XRP could position itself to be a source of liquidity for pairings between CBDCs. The Federal Reserve of Boston would prefer the Digital Dollar be the only global unit of account to combat use of alternatives like the Chinese digital Yuan, but the reality is that demand for dollars will most likely exceed the ability of the Fed to debase the currency because of the ineffective transmission mechanism (re. swap lines and asset swaps). What we are really talking about is the mitigation of counter party risk and a movement away from a world's reserve currency to a completely market based approach to floating currencies and floating asset values that all have pairings via multi-hop digital frameworks just like packets of information float across ISP on the internet. It's coming.
    • AF
      Alan F.
      26 November 2020 @ 02:41
      @santiagoV. very well said. I agree that interoperability will eventually just be a non issue similarly to custody and that we are slowly getting there. Just like how we all use the internet and it just works and we don't discuss the various protocols underneath. It seems as though a bridge currency will be a necessity between CBDC's (for liquidity and eliminating counter party risk) and XRP is positioning itself as a leader for that role. What I'm trying to understand is both the likelihood of it being XRP as well as how giant of an elephant is this? Finally, I wasn't aware the Fed Reserve of Boston made any public statements regarding specifics of the CBDC framework. Thanks.
  • SD
    Sebastien D.
    8 November 2020 @ 14:18
    I'm not a native English speaker but it seems that the number of times of a speaker uses 'you known' correlates with the shallowness of his understanding of a topic, you know. He seems to amalgate very different things and miss a few parts, you know.
    • RP
      Ron P.
      19 November 2020 @ 01:46
      I was thinking the same thing over 350 times est I think it’s more of a habit from younger age then depth of understanding He understands it well ...its just the communication of the material. Someone needs to tell him Maybe he will read this
  • LS
    Lemony S.
    13 November 2020 @ 16:25
    Does anyone know what kind of threat (how real?) the blacklisting of certain block miners/mining pool is? This idea has gotten some traction lately. Thanks.
  • RN
    Richard N.
    11 November 2020 @ 02:58
    Question on the demise of banks after the establishment of digital currencies: Do you think that the OCC guidance allowing crypto custody by banks is the out central banks are going the give SIFIs if they go towards digital assets? This would open them up to hold the assets as collateral and allow customers to earn interest, make loans, and tokenize assets rather than securitize. The banks will need a lot of retooling but I believe that is why they are giving the banks runway to do so,
  • DL
    Dan L.
    9 November 2020 @ 19:10
    The assumption that a non-central-bank-issued digital currency must be a private currency is misleading. Bitcoin, for example, is in no way a private currency. And was in fact conceived to be as non-private as possible by virtue of its decentralized design.
  • DS
    David S.
    5 November 2020 @ 18:53
    Direct funds to citizen's bank accounts without compensating revenue is currency debasement. Tax rate reductions without compensating revenue is also currency debasement. We have been lowering government revenue for years without compensating revenue to eliminate the business cycle. I disagreed with these. During the pandemic, however, currency debasement is necessary to keep even a basic economy going and the poor fed. Since the banks will not and cannot lend to the poor, a more direct way is inevitable. What do you think the pharaoh did with the seven good years of corn? He did not sell it for a high price in Chicago. Our fault is we were already broke when the pandemic hit. DLS
    • PV
      Pietro V.
      9 November 2020 @ 01:54
      Currency debasement is precisely what is compelling CBs to embrace Digital Currencies. For a deeper look into the topic, pls check
  • NT
    Nicholas T.
    7 November 2020 @ 14:27
    When I hear a CBDC ramification possibilities discussion like this, it makes me wonder how BTC adherents can be so sure of its future value/role within the yet undefined paradigm shift.
    • MS
      Michael S.
      7 November 2020 @ 17:53
      Currency debasement, monetization of debt
    • NT
      Nicholas T.
      7 November 2020 @ 19:26
      It's a big gamble to either think that central banks and governments will stand idly if BTC were to truly flourish, or that somehow BTC can meaningfully evade control despite their attempts.
    • TM
      The-First-James M.
      8 November 2020 @ 01:54
      Nicolas T, would you not be motovated to find a way out a system sytemically working to destroy the fruits of your life's work; regardless of the legality of doing so? I know I would, and all I'd need would be a Country like Singapore or Switzerland to allow Bitcoin use within their jurisdiction, and it would be happy days for me...
    • Sp
      Scott p.
      8 November 2020 @ 03:36
      Frankly the macro doesn't matter to Bitcoin as much as everyone thinks. The tech adoption curve that is clearly seen on-chain overrides what anyone else thinks. You'll never force the hardcore hodlers to sell, and the hardcore hodlers are growing exponentially in a fixed supply asset. Nothing else matters.
    • NT
      Nicholas T.
      8 November 2020 @ 04:27
      i would be motivated The-First-James M., but it reminds me of an article I read years ago about a guy with an oil rig off England somewhere in international waters supposedly, outfitted with machine guns to protect your wealth. Like out of a James Bond movie. I can see governments allowing Bitcoin to operate but they will try to work it into the global financial system somehow, so predicting its future value is so hard to predict.
    • TM
      The-First-James M.
      8 November 2020 @ 10:23
      Nicholas T. Agreed, and that's why Bitcoin represents a call option on the Future, and gives it such tremendous optionality. It may come to nothing, but it may come to something. If the latter, and you're not already on board, you'll have missed out on the opportunity for an asymmetric payout.
    • NT
      Nicholas T.
      8 November 2020 @ 21:32
      And so The-First-James M., the BTC unknown makes me stick with gold, which may not have the possible stratospheric upside, but much less downside risk as governments move to a new CBDC framework. Central banks have gold reserves not BTC, and looks like Russia and China have been preparing for years for the great reset by buying more. Whatever happens, gold will be protected as a component of the new world order I think. BTC, not so much. All the same, if I wasn't so old, I'd join you in the BTC super gamble :)
  • GM
    Gary M.
    8 November 2020 @ 19:58
    Very good👏👏
  • MC
    Mike C.
    8 November 2020 @ 09:38
    Really great interview. The privacy law concept playing into CBDC relative attractiveness as a safe haven is very interesting. RV - please take a note of this as a potential theme worth more attention. On gold and BTC being debasement plays and not vol plays its worth noting the vol characteristics changing in the market which singals that these traditional relationships are changing. It also depends on what currency you are domiciled in. Obviously in EM FX terms gold performs nicely during market drawdowns but even in March 2020 it did very well in AUD and GBP terms.
  • MF
    Mike F.
    8 November 2020 @ 03:44
    When there is a CBDC with direct accounts, full interest rate control and MMT, there would be no need for govt bonds. The CB would just buy all the existing bonds with CBDC. The CB would fund govt by 'printing' CBDC. No bonds. No taxes.
    • DS
      David S.
      8 November 2020 @ 05:11
      I do not know about no taxes. DLS
  • DT
    David T.
    7 November 2020 @ 18:19
    Interview was good but, the information is the same as all other digital currency people are talking about. There is no something new in these CB digital currency info. The main issue is how CBDC will compete with Bitcoin and other coins. The rest keeps repeating.
  • CB
    Clifford B.
    5 November 2020 @ 16:41
    Very informative coherent discussion. Regarding BTC and gold would be great to get a few detractors on. Way too one sided offering in this regard.
    • TM
      The-First-James M.
      7 November 2020 @ 02:23
      Need to get Raoul to interview Erik Townsend of Macrovoices, or Kevin Muir. Incidentally, anybody but me find it to be a bit too much of a coincidence that Mark Yusko has not been invited onto Macrovoices since he pivoted Morgan Creek to full blown Crypto...?
  • AI
    Andras I.
    6 November 2020 @ 10:37
    Great overview of most of the views I run into previously - well worth the hour to get up to speed! For me I'm always left with one (rhetorical) question: Jeff Snider argues that the dollar shortage creates a massive drag and output gap on the world's economies since the early 2000's (and especially since GFC) through the Eurodollar system that dried up due to regulation but mostly due to banks' risk avoidance. So the question: can CBDC's accelerate the world going back to growth and get out part-time working to benefit the US?
  • MD
    Matt D.
    6 November 2020 @ 05:14
    Thanks Ed. Great interview, Bill is always great. I asked a few weeks ago a similar question (which was referred to in this interview): Why now with digital currencies can currencies be just "issued" - whereas fiat is deemed to be backed by the USD? The process of going digital doesn't (to me) imply the whole conceptual value of a currency changes? Look forward to more of Bill. Cheers.
  • MH
    Martin H.
    6 November 2020 @ 01:45
    State money putting up with competition with no real upside? What world are you living in? When has this ever been tolerated in the past? It can only happen if the thesis that they can do nothing about it is true OR there is some justifying upside for the state.
  • AB
    Ash B. | Real Vision
    5 November 2020 @ 22:21
    Fantastic interview. Campbell raises fascinating and fundamental questions about the implementation of CBDCs. Private citizens custodying assets with their CBs, instead of at private banks via the two-tier system we have now, brings up some curious quandaries. Q: When is a dollar not worth a dollar? A: When market participants price preference into the credit worthiness of the custodian. Really interesting ideas.
    • DS
      David S.
      5 November 2020 @ 23:35
      Excellent comment. CBs can take over some of the banking functions, but local and regional banks are much better at understanding and lending to small/medium firms and personal loans. DLS
  • AK
    ANDY K.
    5 November 2020 @ 23:31
    Great interview! CBDCs could be a game changer, and Bill is one of the very first people that I know of who has done a deep dive into the development of CBDCs and really thought through their potential implications. The ramifications of this area are huge and merit an in depth-examination. It would be good idea to have follow up interviews on CBDCs so that the RV investment community stay top of this important topic.
  • DS
    David S.
    5 November 2020 @ 23:29
    I always learn from Mr. Campbell's interviews. More importantly, I gain a perspective on the timing of expected events. Thanks. DLS
  • CS
    Clay S.
    5 November 2020 @ 23:02
    Risks. Perhaps this is Fed-direct monetization, and also Fed-privatization?
  • RQ
    Robot Q.
    5 November 2020 @ 22:03
    Central bank digital currencies (CBDCs) give central bankers the de facto power to enact fiscal policy, but they are unelected and independent of democratically elected governments. Are we witnessing the emergence of an elite aristocracy, unaccountable to the populace, who will be able to print money, control the banking system, set interest rates and tax & spend as they see fit?
  • BS
    Brian S.
    5 November 2020 @ 21:34
    Great interview, i learned a lot!
  • AA
    Aymman A.
    5 November 2020 @ 21:04
    Digital currency in the form of a ledger kept in a central computer is TOTALLY different from a digital bearer instrument that the block chain enables. China is interested in CBDC because they will be able to bypass the SWIFT system. I think we are confusing digital record keeping of traditional currency with a digital bearer instrument.
  • PB
    Pieter B.
    5 November 2020 @ 20:30
    This is really interesting! Thanks a lot for the nice flow and in-depth conversation!
  • DS
    David S.
    5 November 2020 @ 18:37
    Excellent interview. Quick comment: During a strong market downturn everything goes down. The important point is will gold and Bitcoin go back up after the fall. That is why you have a 25% allocation to cash in the permanent portfolio. DLS
  • JM
    John M.
    5 November 2020 @ 18:09
    IMO negative interest rates be punitive for retired seniors who need their savings for retirement i.e., must hold some cash. Never happens, is my guess!
    • DS
      David S.
      5 November 2020 @ 18:33
      John M. - Lower bound interest have already destroyed the risk-free interest rate for seniors. In Switzerland negative rates are were not charged to individuals by the banks until a certain level was reached. I do not know now, but that was the way it was last fall. Although a zero rate is better than a negative rate, it is not going to keep up with CPI. DLS
  • JW
    Josh W.
    5 November 2020 @ 18:17
    Some great intuitive foresights! Awesome Interview. Puzzled that we hear about Libra (which has been stifled by regulators) and nothing about Ripple (XRP), which is positioned to become a pivotal part of the global financial system in the future. (Page 100)
  • AJ
    Aakash J.
    5 November 2020 @ 16:16
    Bill is great every time he's on the show! Same goes with the last time Gundlach was on with Raoul. Doubleline has some great talent!
    • EH
      Edward H. | Real Vision
      5 November 2020 @ 17:01
      I know! I am impressed by how big picture and forward looking Bill’s thinking is. Clearly, DoubleLine are top notch macro guys
  • KL
    Kim L.
    5 November 2020 @ 16:00
    Great Interview. Lots of good information.
  • MS
    Mike S.
    5 November 2020 @ 11:35
    First rate interview. Well done, Ed. This is a double-listen one for sure. Please revisit in the coming months!