The Central Bank Digital Currency Paradigm Shift
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: https://doubleline.com/dl/wp-content/uploads/Bilateral-Digital-Currency-Payments-October-2020.pdf and https://doubleline.com/2020/10/the-pandoras-box-of-central-bank-digital-currencies-bill-campbell-october-2020/. 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.