In the present system, almost all payments are executed with the use of current accounts with commercial banks: the current account of the payer is reduced with some amount (the amount of the payment), this amount is added to the current account of the payee. Only banks and government have an account with the Central Bank. The accounts of the banks are necessary to settle the payments in case payer and payee have accounts with different banks. After the financial crisis of 2008, the confidence in commercial banks was gone and there were all kind of proposals to allow all economic actors to have an acount with the central bank and use that to make payments. There was also poolitical action in that direction. Th expectation was that it would lead to a more robust monetary system. We contributed to the debate by writing two papers in CEREM (The Central European Review of Economics and Management). The first one devoted to the design of this type of money (Central Bank Digital Currency, CBDC), the second one to the question of how to control the aount of money.
Design of a rule based monetary policy
Unfortunately, the drive to change things has disappeared in between. The plans interfered heavily with the profitability of the banks and lobby of the banks has been too powerful. The ECB is still planning to do something with CBDC, but very marginal, taking care not to interfere too much with the busines model of commercial banks, and the US Fed has skipped their CBDC-plans completely.