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Sweden’s central bank says it has begun testing an e-krona

reuters.com

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Re: Sweden’s central bank says it has begun testing an e-krona

#61

Post by lawn »

teh_infallible wrote: post #48
rabuse wrote: post #7

Earlier quoted context omitted.

It's buzzwords being thrown around again. Blockchain is highly inefficient for anything other than decentralized consensus.

Are blockchains inefficient if you’re not using proof of work? I thought it was the latter that was a source of inefficiency, and you don’t need PoW on a permissioned network.

Even if you use some other consensus mechanism they're still inefficient. All full nodes in the network still have to propagate, validate and store all transactions forever.

This is indeed much more inefficient compared to a centralized solution and it's very difficult to create a decentralized network that can handle the amount of transactions that VISA processes for example.

Re: Sweden’s central bank says it has begun testing an e-krona

#62

Post by lucozade »

beefield wrote: post #58
acuster wrote: post #31

Kudos to the swedes for working methodically to try to find a way for the central bank to issue digital money. They have been working for a number of years on this and seem to be thinking effectively about all of the issues involved. One of the reasons that most interest me in this type of digital money comes from its use by the government itself within its various branches. Moving the financial accounts of the gover…

> Kudos to the swedes for working methodically to try to find a way for the central bank to issue digital money. Can you elaborate what you mean by digital money? My understanding is that vast majority of money issued by central banks is already digital.

Sweden is moving unusually rapidly to a cashless (or near cashless) society. A lot of countries are seeing big increases in the use of digital payments but generally not big decreases in the value of cash payments although that may well come eventually. In Sweden it's already happening.

Like most central banks, the Riksbank runs 2 credit risk free payment systems: one that supports commercial banks and another, cash, that supports both companies and the general public.

The central bank's relationship with commercial banks isn't really affected by this initiative. However, the thinking is that a credit risk free payment system for the general public is still valuable for the reality/perception of a stable financial system.

If cash (effectively) goes away then so does the second payment system. What the Riksbank are doing is looking at alternatives that have the payment system properties of cash but in a digital form.

As I understand it, they're looking at a couple of models. A digital cash equivalent i.e. mostly anonymous peer to peer. And an account balance based i.e. central banking accounts for joe public.

It's interesting work and, in my opinion, likely to be followed closely by other central banks as I'm sure they are predicting similar dynamics in the next 20-30 years.

Re: Sweden’s central bank says it has begun testing an e-krona

#63

Post by acuster »

beefield wrote: post #58
acuster wrote: post #31

Kudos to the swedes for working methodically to try to find a way for the central bank to issue digital money. They have been working for a number of years on this and seem to be thinking effectively about all of the issues involved. One of the reasons that most interest me in this type of digital money comes from its use by the government itself within its various branches. Moving the financial accounts of the gover…

> Kudos to the swedes for working methodically to try to find a way for the central bank to issue digital money. Can you elaborate what you mean by digital money? My understanding is that vast majority of money issued by central banks is already digital.

You are right, of course, that most of the accounts at the central bank are digital. Also, 'money' is a loose term and 'digital money' much more so. I used the term loosely since fully defining it would take a lot of time and space.

The difference of the initiatives, such as the 'e-krona' project, comes from central banks asking themselves whether the public at large could have an obligation, direct from the central bank, in digital form. Most cash is an 'obligation' to some central bank, a guarantee backed by them. Yet no individual citizen can hold a digital account with the central bank. A natural question is 'why not'? Up to now, it has been mostly practical, that the bank did not want to have to run a retail system. The rise of digital currencies has opened a new possibility: the central bank could run the system and not need to run retail operations. Thus, the research and experiments.

Re: Sweden’s central bank says it has begun testing an e-krona

#64

Post by kragen »

socialdemocrat wrote: post #33
kragen wrote: post #4

This headline is goofy. Central banks have been using digital electronic currencies for decades. The difference is that now they want to include all Swedes in the electronic currency system, not just Swedish banks, as they have been for decades. (And the claim that this uses "blockchain technology" is just a lie; it's a centralized database. It's no more a blockchain than Git is.) I think this is a terrible idea give…

Most of your money is already on a centralized architecture of you are using a bank. But I agree that a decentralized system would be preferable. However I can see a benefit in electronic money becoming a public utility rather than being controlled by private companies trying to extract rent. Visa and MasterCard engage in massive rent extraction. Would have been nicer with some form of robust international system for…

> a decentralized system would be preferable. ... a public utility rather than being controlled by private companies ... Would have been nicer with some form of robust international system for money transfer and exchange where middle men could not nickel and dime you

Well, in fact, the system you are describing has existed for 11 years and inspired the Swedish system being discussed here; presumably the attributes you are wishing for are precisely the ones that they want to eliminate by creating their own private system instead of just using Bitcoin.

Re: Sweden’s central bank says it has begun testing an e-krona

#65

Post by leppr »

darawk wrote: post #57
leppr wrote: post #49

Earlier quoted context omitted.

> There is a difference between deciding all transactions will be published and making them public by design constraint. In a "blockchain" with a centralized validator set, there's no constraint forcing transactions to be public. The network will keep running even if the validators decide to stop publishing transactions. It's very much still a social contract. Tampering (adding false transactions) is the only thing t…

Right, but users would know when a secret transaction has been added. And no, your example does not negate the only technical advantage. Governments are not the only entities that might tamper. And most importantly, a blockchain forces even government tampering to be transparent, whereas a private database does not.

Yes, it's less black and white than I suggested, but the improvement is still a minimal increment compared to what someone would expect when hearing "blockchain". I guess I'm afraid the public record would just end up looking like this:

https://upload.wikimedia.org/wikipedia/commons/0/09/Redacted...

with citizens unable to discern between abusive and reasonable interventions.

Re: Sweden’s central bank says it has begun testing an e-krona

#66

Post by dublinben »

navidfarhadi wrote: post #8
surfsvammel wrote: post #2

My company’s suggested implementation made it to the second round of proposals. Unfortunately we are not involved any more. There are some serious challenges that needs to be ironed out. Two that comes to mind is how to solve offline payments, the other one is how to live up to the requirement from the government that the currency needs to be liquid also during a crisis (what if electricity or telecom doesn’t work?)…

> My company’s suggested implementation made it to the second round of proposals. If you don't mind me asking what company do you work for? I am actually studying computer science (security and privacy emphasis) at KTH in Sweden and I have been interested in CBDC for some time now. If your company offers master's theses I would love to connect on LinkedIn or via email. > the other one is how to live up to the require…

How do those without bank accounts like tourists or the indigent operate in this "cashless" system?

Re: Sweden’s central bank says it has begun testing an e-krona

#67

Post by surfsvammel »

lawn wrote: post #3

> The pilot will run until February 2021 and will use block-chain technology, the Riksbank said. Will it really? Riksbanken can have a central server to resolve any double spends, which is only really a problem in a decentralized network. Once you have a singular authority you can just let them decide, and you'll have no need for an inefficient cryptocurrency. > which is being developed by consulting firm Accenture A…

I believe Riksbanken want it to be decentralised though. They don’t want to have to bother with Know-Your-Customer stuff. I believe they don’t want to have to store personal data. At the same time they don’t want it to be anonymous.

That’s why a solution where the commercial banks drive the chain, and keeps the KYC, allocating “anonymous” blockchain addresses, or accounts at the riksbank, has been proposed. The customers bank know the customer, the Riksbank does not. But the Riksbank, can still issue interest directly on the currency directly to the customer.

There are several ways that the nodes, or commercial banks, or whoever it might be, can make the whole think pseudo-anonymous for the customer. Would also let commercial banks offer services around it, making it easier to get the banks on board.

Re: Sweden’s central bank says it has begun testing an e-krona

#68

Post by surfsvammel »

socialdemocrat wrote: post #32
lawn wrote: post #3

> The pilot will run until February 2021 and will use block-chain technology, the Riksbank said. Will it really? Riksbanken can have a central server to resolve any double spends, which is only really a problem in a decentralized network. Once you have a singular authority you can just let them decide, and you'll have no need for an inefficient cryptocurrency. > which is being developed by consulting firm Accenture A…

Problem with a central server for money is that it makes the whole state vulnerable. If everybody use central bank e-currency you can just attack their sever to destroy the flow of all money. But if it is distributed like real crypto currency, you have to be able to attack and take down hundreds or thousands of severs geographically spread.

I don’t disagree with you, but central server for money is what we have had since the beginning of time right? We have central banks, where banks have cash, and and central securities depositories, where they have their securities.

Re: Sweden’s central bank says it has begun testing an e-krona

#69

Post by bitxbit »

pjc50 wrote: post #36
bitxbit wrote: post #20

All these banks and financial institutions launching digital currencies miss the whole point: FRICTIONLESS transactions. Right now you have layers upon layers of network companies nickle and diming you. This is literally someone taking a penny from everyone’s account except it is a lot more than that. There’s absolutely no reason for Mastercard and Visa to even exist in 2020. They’re sitting on top of some obsolete i…

The issuing banks provide credit and insurance, and quite a lot of effort in the system goes to anti-fraud. Especially for online payments.

It used to be that way but with all the data available to us now, managing fraud isn’t as difficult as it used to be. Definitely not to the tune of 3-4% both ways combined in many cases.

Re: Sweden’s central bank says it has begun testing an e-krona

#70

Post by PeterisP »

dublinben wrote: post #66
navidfarhadi wrote: post #8

Earlier quoted context omitted.

> My company’s suggested implementation made it to the second round of proposals. If you don't mind me asking what company do you work for? I am actually studying computer science (security and privacy emphasis) at KTH in Sweden and I have been interested in CBDC for some time now. If your company offers master's theses I would love to connect on LinkedIn or via email. > the other one is how to live up to the require…

How do those without bank accounts like tourists or the indigent operate in this "cashless" system?

Tourists tend to have cards and use them.

The poor people have bank accounts, because if you're poor and getting some gov't assistance, that gets transferred to a bank account (I mean, how else? No non-financial institution or gov't agency is going to employ tellers handing over cash directly, they all use banks for that, and checks aren't used); it's general EU policy that basic financial services (bank accounts, bank transfers, electronic bill paying, card payments) should be available to everyone including the very poorest. Even a homeless, unemployed drug addict would be expected to have access to these services.

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