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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)?

#71

Post by mizzack »

pavlov wrote: post #65
mizzack wrote: post #51

Earlier quoted context omitted.

It's absolutely nitpicking. The "G" just stands for governance, otherwise it'd be a "C". On an individual level that could mean paying taxes on time, maintaining employment, etc. > A framework used to evaluate corporate investment candidates has nothing to do with social credit score boogaboos. Functionally, ESG _already is_ a social credit score for companies and a tool for compliance. Do you think companies are tak…

> ”The "G" just stands for governance, otherwise it'd be a "C". On an individual level that could mean paying taxes on time, maintaining employment, etc.” That’s not at all what governance means in the corporate context. So you’re basically saying that ESG can be applied to individuals as long as you redefine it to something completely else. As far as companies getting rated, well duh, there’s a giant industry around…

> So you’re basically saying that ESG can be applied to individuals as long as you redefine it to something completely else.

There are 802 million Google results for "personal governance". I'm not redefining anything.

> Companies don’t have civil liberties and they don’t have the right to receive investments from anyone who doesn’t choose to invest.

When the investment (or not) comes through trillion dollar asset managers by way of the Fed, it looks a lot more coercive.

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

#72

Post by hocuspocus »

jqpabc123 wrote: post #63
hocuspocus wrote: post #56

Earlier quoted context omitted.

UK's Faster Payments, EU's SCT Inst, Brazil's Pix, India's UPI, ... Shifting retail banking to the central bank brings a lot more questions than just worry about what happens to cash.

EU's SCT Inst SCT Inst stands for SEPA Instant Credit Transfer scheme. It was introduced by the Euro Retail Payments Board (ERPB) in order to enable rapid electronic payments within the eurozone. In a nutshell, SCT Inst facilitates an instant or near-instant clearing of a transaction between originator and beneficiary. Potato, po-tat-o. ERPB = Central Bank Credit Transfer Scheme = Digital Currency Put them together a…

What you want is instant interbank settlements that have existed for 20+ years in some places.

The scope of CBDCs is way broader than that. If no commercial bank is impacted by a CBDC then it wouldn't be a central bank digital currency, just a digital currency, and that's already the case for most of the money supply. If you use the term CBDC you're implying that the central bank would oversee a much bigger part of the money creation.

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

#73

Post by nitwit005 »

If everything was fine, businesses wouldn't often demand cash.

The cost of using a credit card is fees, and similarly splitting your bill with Paypal or Zelle means you are paying those firms. It would obviously be a boon to get rid of all those transaction costs somehow.

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

#74

Post by brewmarche »

An idea: Smart contracts for derivatives. Nowadays a lot of OTC derivatives are collateralised between parties. Collateral payments depend on each party’s valuation which might differ and may come late. You could program the valuation and transfer of the collateral.

Whether a regular person can get an CBDC wallet is another (orthogonal) question. It’s equivalent to whether regular people can open an account at the central bank, even without CBDC.

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

#75

Post by landemva »

crazygringo wrote: post #46
idiotsecant wrote: post #28

Earlier quoted context omitted.

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 g…

> more effective safety net (... payments that can't be spent on gambling)

> there's no alternative that does them better

State-run EBT cards exist and seem to be working OK.

Federalizing more things reduces people's ability to usefully vote with their feet by moving to a different State when people don't agree with State government policies.

> more stable economy (lower inflation, higher employment)

Speculative and seems unlikely. Do you have examples where a CBDC helps pay for projects better than the existing payment rails?

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

#76

Post by landemva »

crazygringo wrote: post #69
PatentlyDC123 wrote: post #64

Earlier quoted context omitted.

That gives a lot of weight to the idea that officials in the Fed (or your country's central bank) and government will make the best decisions for everyone given increased data produced by a digital currency. History doesn't really show that officials make the right decision even with sufficient data. For a small example, until a few months ago many US Treasury and Fed officials insisted that any inflation would be "t…

Central bank policy isn't perfect, because human beings aren't perfect. But it's far, far, far better than having no policy at all -- economies used to follow crazy harmful cycles of booms and busts, bank runs, runaway inflation, and so forth. It's easy to take for granted how effective central bank policy is because many of us haven't experienced the lack of it at home in our lifetimes. The central bank doesn't have…

You may be confusing USA Congressional fiscal policy with central bank monetary policy. Federal Reserve (private contractor with no federal government employees) could spend more resources on regulating banks instead of bailing out banks via purchases of bank's underperforming debts.

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

#77

Post by landemva »

neilwilson wrote: post #2

Normal bank accounts are on the books of the commercial banks. That requires a deposit insurance scheme to make those deposits "money good". Otherwise you end up being an unwitting investor in the bank and subject to losing some or all of your deposit if the bank lends badly. A digital currency, at least in the terms generally discussed by central banks at the sharp end, moves your bank account to the books of the ce…

> That requires a deposit insurance scheme

It doesn't require it, though the existing structure uses this in part to allow banks to take excessive lending risk. It also allows depositors to not care about solvency of the bank.

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

#78

Post by landemva »

syntheweave wrote: post #47

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 therefor…

Crypto is relevant because a transaction can not be censored, nor my coins arbitrarily seized.

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

#79

Post by landemva »

glitchc wrote: post #5

I think the answer is in your question: All forms of money you currently use online (bank-transfer, Zelle, credit card, etc.) are owned and operated by private entities. None of them are public money like cash is, backed by the central bank. CBDC is intended to be a digital equivalent of cash, so that people have a public money option for digital purchases. It could mean anything from everyone having an account at th…

> like cash is, backed by the central bank.

In USA, dollars are not backed by central bank. Dollars are backed by the federal government.

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

#80

Post by AbrahamParangi »

crazygringo wrote: post #46
idiotsecant wrote: post #28

Earlier quoted context omitted.

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 g…

One might as well discuss the user-benefits of nerve stapling.
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