As noted in my previous post, I was discussion leader at a recent colloquium on moving towards a cashless or less-cash society. Here are some quotes from Rogoff, followed by questions I asked.
Certainly, a lot of the angst over electronic currency comes from deeply rooted fears of digital theft and paralysis after a major power outage.
He goes on to say why he thinks this won’t be a big problem.
What about a long emergency? Rogoff writes:
In a sufficiently prolonged emergency when there is no longer any way to recharge cell phones and supplies of small bills are depleted, the government can air-drop currency for temporary use, redeemable for electronic currency after the crisis.
(i) Has any government ever air-dropped currency? If so, how well did that work out?
(ii) Can the government be trusted to do this well and at the right time?
One monetary economist answered the first question: if I recall correctly, the only case he knew of where a government air-dropped currency was the British government air-dropping counterfeit Germany currency in Germany.