The Hidden Cost of Cashless Payments on Central Banks

This episode examines how the shift toward digital payments is quietly altering central bank balance sheets and monetary policy transmission. We look at the specific mechanics of reserve requirements, the rise of non-bank payment processors, and why the Federal Reserve’s traditional tools are becoming less predictable in a cash-light economy. Lucas breaks down the data from recent quarterly reports while Luna challenges the assumption that digital money is just faster physical money. They explore the structural risks facing the banking system when transaction volumes explode but deposit growth stalls.

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