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Ask HN: Why do we need central bank digital currency (CBDC)?

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Re: Ask HN: Why do we need central bank digital currency (CBDC)?

#41

Post by jqpabc123 »

hocuspocus wrote: post #30
jqpabc123 wrote: post #17

Explain to me like I am 5 Out of sight, out of mind. You don't see it but private transaction processors (Visa and Mastercard) consume up to 3% of the transaction amount. Over the course of a year, this amounts to $50 billion removed from the economy. The merchant pays this --- and passes the cost along to you in terms of higher prices. The money transfer system that deposits your check is old and slow and involves h…

> Out of sight, out of mind. You don't see it but Visa and Mastercard consume up to 3% of the transaction amount. Over the course of a year, this amounts to $50 billion removed from the economy. The merchant pays this --- and passes the cost along to you in terms of higher prices. Visa and MC get only a fraction of the PSP fees. You can regulate this space and bring the fees down (like the EU did). But fundamentally,…

You just need to bring your banking infrastructure to the 21th century.

ACH is the central component of the banking infrastructure that needs to be brought into the 21st century. And a CBDC is how you do it.

Re: Ask HN: Why do we need central bank digital currency (CBDC)?

#42

Post by Sytten »

hocuspocus wrote: post #37
Sytten wrote: post #31

Earlier quoted context omitted.

I would argue that yes it can be done outside of a platform like this, but each time you want to implement a new policy you need to talk to all private actors and force them to implement your policy. With programmable money (think ETH smart contracts for the government) a policy could be roll out to the entire population uniformly in a matter of days. This is why this concept is so powerful and is inevitable IMHO.

> I would argue that yes it can be done outside of a platform like this, but each time you want to implement a new policy you need to talk to all private actors and force them to implement your policy. And you know what, many jurisdictions have done exactly that, and brought massive improvements to their banking infrastructure in the last decades. Private actors either comply or lose their banking/credit/payment lice…

Ho I do not disagree but coming from Canada where we have been talking about open banking for the past 10 years without any progress I will take a smart contract any day over the big 5 banks that we have today.

The question is not if it can be done outside of the platform, it is how much time it takes. I would encourage you to try to code a smart contract even if you dont like the concept, it is eye opening.

The fact that would have a standardized VM for money where you can write small programs to implement your law is just another level frlm what we have.

Re: Ask HN: Why do we need central bank digital currency (CBDC)?

#43

Post by idiotsecant »

jesuscript wrote: post #35
idiotsecant wrote: post #32

Earlier quoted context omitted.

So...price fixing? That definitely hasn't worked so well in the past.

Whether it works well or not will not be of concern, it will be the only choice.

except that it's not. Every government who ever did price fixing said literally the same thing. Then people make black markets trading chickens for goats. It's literally impossible to prevent and the first time someone does it your price fixing scheme evaporates.

Re: Ask HN: Why do we need central bank digital currency (CBDC)?

#44

Post by adolph »

jqpabc123 wrote: post #17

Explain to me like I am 5 Out of sight, out of mind. You don't see it but private transaction processors (Visa and Mastercard) consume up to 3% of the transaction amount. Over the course of a year, this amounts to $50 billion removed from the economy. The merchant pays this --- and passes the cost along to you in terms of higher prices. The money transfer system that deposits your check is old and slow and involves h…

Fees

> removed from the economy

This is untrue. Bank fees are not placed into landfills, figurative, literal or otherwise. At best you can say that dispositive decision making power for the money is changed from the transaction participants to the transaction facilitators. One might say that the leaders of banking orgs spend it on the frivolous, like large boats. The boatwright’s children might differ as otherwise they’d be beggars.

Re: Ask HN: Why do we need central bank digital currency (CBDC)?

#45

Post by jqpabc123 »

amadeuspagel wrote: post #36
jqpabc123 wrote: post #17

Explain to me like I am 5 Out of sight, out of mind. You don't see it but private transaction processors (Visa and Mastercard) consume up to 3% of the transaction amount. Over the course of a year, this amounts to $50 billion removed from the economy. The merchant pays this --- and passes the cost along to you in terms of higher prices. The money transfer system that deposits your check is old and slow and involves h…

What I don't really understand here is in what sense you're suggesting a new currency. It seems that you're suggesting that the central bank replace Visa and Mastercard. But those don't have their own currency either.

A CBDC is not a new currency for individuals to use. Everything you do will still be denominated in good ole USD.

A CBDC is digital currency that banks will use to process transactions between each other behind the scenes.

Right now; if I use Bank A and you use Bank B, there is no way for me to transfer money to your account without going through ACH (Automated Clearing House) which can take days and despite it's name, isn't really "automated" --- it was originally designed to process paper checks.

A CBDC will change this and make instant account transfer 24/7/365 possible. It will be like Venmo for everyone without any sign up --- you know, Venmo only works if both parties have signed up for a Venmo account and have funds deposited in Venmo. With a CBDC in place, the sign up will be an automatic part of setting up an account with *any* bank.

A CBDC will make it easy for you to split the cost of dinner with a friend while you're sitting at the table. Just use your phone to sign in to your bank account and make the transfer. Likewise, your friend will be able to sign in to his/her account and see that it's done --- instantly --- like magic, something that has never been possible before.

Basically, a CBDC will speed up and modernize the banking system.

Re: Ask HN: Why do we need central bank digital currency (CBDC)?

#46

Post by crazygringo »

idiotsecant wrote: post #28
blihp wrote: post #19

People don't need it, but governments want it very badly. It would provide governments with greater visibility into and control over the money supply and flows. This would be both at the macro (arguably good) and micro (arguably bad) levels. Just as here on HN we read from time to time about people being locked out of various online services (i.e. Google, Facebook etc.) for doing something a company doesn't like, a C…

In short, permissioned digital currency is all the bad parts of crypto and none of the good parts, while simultaneously getting rid of all the good parts of cash. There's almost no benefit to the user that something else doesn't do better.

Incorrect. The benefits come from more informed macroeconomic policy, more targeted economic tools, and potential benefits around more targeted and effective sanctions against international bad actors.

The idea is that the benefits to the user are a more stable economy (lower inflation, higher employment), a more effective safety net (politicians more likely to approve payments that can't be spent on gambling), and greater peace (targeted sanctions as an alternative to war).

Whether any/all of these will work effectively is debatable of course, but there are legitimately good reasons to think they would. And no, there's no alternative that does them better, and crypto certainly doesn't. Again, the individual merits can be argued, but the idea that it is "all bad no good" is simply not the case here.

Re: Ask HN: Why do we need central bank digital currency (CBDC)?

#47

Post by syntheweave »

CBDC removes the overheads of banking as it exists, which always had a foundational premise of limited ability to govern and coordinate directly at large scale. Private banks have all kinds of specific responsibilities and requirements to move and store money, and they extract fees from that.

The basic logic(from the perspective of the government) is that this is a further centralizing of economic power, and therefore adds efficiencies of scale.

The downside of that is basically that it closes off any remaining illusions of privacy from the state in one's financial matters. The banks were already cooperating in the existing framework, this just makes it easier. And really, I think I'm OK with this as a clarifying step. In the bad old days you were basically relying on a system that would get things wrong with no recourse: sometimes banks failed and you lost your deposit. If you actually wanted to maintain economic privacy under that system you were at the mercy of the bureaucracy, and if you wanted specifically to evade the law and taxation you would have to set up a semblance of alibi(thus laundering etc.)

The whole sphere of crypto/privacy coins doesn't really enter into this in any direct way, since the premise of those is to suggest economic ideas outside of the model of the nation state, which is actually different from a "for or against" position as is often imagined: it's just a different kind of economic technology for account and settlement, one that prioritizes keeping a consensus secure over installing a speedy arbiter.

Re: Ask HN: Why do we need central bank digital currency (CBDC)?

#48

Post by jesuscript »

idiotsecant wrote: post #43
jesuscript wrote: post #35

Earlier quoted context omitted.

Whether it works well or not will not be of concern, it will be the only choice.

except that it's not. Every government who ever did price fixing said literally the same thing. Then people make black markets trading chickens for goats. It's literally impossible to prevent and the first time someone does it your price fixing scheme evaporates.

Has it been done at the scale we’re about to enter? I honestly can’t see an alternative here, but I’m happy to hear your thoughts. We’re talking most of the Western world, and to a lesser extent China/India, but they traditionally keep the elders at home for free anyway (which means they will have to subsidize the average working age people - front loading the problem essentially).

Re: Ask HN: Why do we need central bank digital currency (CBDC)?

#49

Post by jqpabc123 »

idiotsecant wrote: post #28
blihp wrote: post #19

People don't need it, but governments want it very badly. It would provide governments with greater visibility into and control over the money supply and flows. This would be both at the macro (arguably good) and micro (arguably bad) levels. Just as here on HN we read from time to time about people being locked out of various online services (i.e. Google, Facebook etc.) for doing something a company doesn't like, a C…

In short, permissioned digital currency is all the bad parts of crypto and none of the good parts, while simultaneously getting rid of all the good parts of cash. There's almost no benefit to the user that something else doesn't do better.

Totally upside down and backwards.

Crypto is all the bad parts of a CBDC and none of the good parts. A CBDC will eliminate any argument for crypto ... with the exception of paranoia ... which is unfounded since crypto keeps a public record of everything you do.

Re: Ask HN: Why do we need central bank digital currency (CBDC)?

#50

Post by pavlov »

yonaguska wrote: post #38
pavlov wrote: post #21

Earlier quoted context omitted.

> "wait til you have an ESG score for your personal life" How exactly do you suggest the 'G' part would work? It's short for "corporate governance" you know. I get the feeling you're getting these bizarre talking points from some right-wing echo chamber where they're coming up with a new scary acronym panic on a regular basis. "Watch out, the ESG will CRT you into the NWO!"

Did I need to spell out more explicitly the connection between social credit scores and China implements them and ESG scores that have been brought to the rest of the world, and that maybe having digital, government managed currencies will allow our own western governments to follow the China experiment? Thanks for nitpicking a loose use of the term ESG, and then dismissing everything else with the categorical label…

It's not nitpicking when you're using the term in a completely inapplicable, absurd sense.

A framework used to evaluate corporate investment candidates has nothing to do with social credit score boogaboos. It makes as much sense as saying: "Soon Big Government will be assigning buy/hold/sell ratings to you!"

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