We outline a framework for issuing fiat-backed coins to a wide set of end-users. We show that a narrow bank is an important part of this framework, needed to increase circulation and acceptance of such coins. We argue that fiat-backed coins issued by a purpose-built narrow bank have considerable advantages compared to central bank digital cash, and can be used to achieve improved financial stability and solve some of the more vexing problems affecting financial infrastructure.
Narrow banks and fiat-backed digital coins
Published: 30 April 2018