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2 results

  • 12 - The ‘Klair Effect’

  • from Part IV - Cryptocurrency Economics and Monetary Policies
  • Edited by Reena Aggarwal, Georgetown University, Washington DC, Paolo Tasca, University College London
  • Book:
    Digital Assets
    Published online:
    06 March 2025
    Print publication:
    13 March 2025, pp 269-293

  • Summary

    This chapter looks at central bank digital currencies and aims to extend our understanding and the use cases for CBDCs in line with domestic and international economic policies. It examines central bank transactions and how money supply can be controlled and maintained using CBDCs. Over the years, the use of quantitative tightening has been limited due to the current functionality and utility of a country’s financial system. The “Klair Effect” is a form of quantitative tightening; it does not use the apparatus of interest rates to control the inflation rate; instead, a “delete button” to control the money supply on a central banks’ balance sheet.