#122 Naya Paisa, Purana Qissa 🎧

<em>While excellent newsletters on specific themes within public policy already exist, this thought letter is about frameworks, mental models, and key ideas that will hopefully help you think about any public policy problem in imaginative ways. </em><br/><br/><em>Audio narration by </em><a target="_blank" href="https://www.ad-auris.com/"><em>Ad-Auris</em></a><em>.</em><br/><br/>Global Policy Watch: A Mint With a Role<br/><br/>- <em>RSJ</em><br/><br/>The People’s Bank of China (PBOC) has been trialling a form of digital Yuan for the past year. Last week the trials entered their second phase. (<em>Umm, they seem to have more phases for this than for developing their Covid vaccines</em>).<br/><br/>The <a target="_blank" href="https://www.wsj.com/articles/china-creates-its-own-digital-currency-a-first-for-major-economy-11617634118">Wall Street Journal woke up to the digital Yuan</a> (<em>paywalled</em>) last week with this article that starts off like a Marquez novel:<br/><br/>“A thousand years ago, when money meant coins, China invented paper currency. Now the Chinese government is minting cash digitally, in a re-imagination of money that could shake a pillar of American power.” <br/><br/>What’s not to like an article that begins with hyperbole? <br/><br/>But there’s some grain of truth there. Before we go further we need to make sense of sovereign digital currencies or what’s now being called Central Bank Digital Currencies (CBDC). <br/><br/>What’s Money?<br/><br/>Like we have <a target="_blank" href="https://publicpolicy.substack.com/p/111-tu-tu-main-main-in-the-information">written in an earlier post</a>, money performs three roles for us: <em>it is a store of value, it is a medium of exchange, and it is a unit of measure. </em>Through it we save for the future, pay for goods and services and measure the value of very different things using a common unit. These roles mean anything that aspires to be a currency (the usable form of money) should have a relatively stable value over time and should be widely acknowl