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Bank of England to explore a potential Central Bank Digital Currency

bankofengland.co.uk

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Re: Bank of England to explore a potential Central Bank Digital Currency

#101

Post by SideburnsOfDoom »

mytailorisrich wrote: post #69
KaiserPro wrote: post #57

Earlier quoted context omitted.

That's literally how the BoE works. when you do a bank transfer, do you think they physical cash? When the BoE does quantitative easing, they don't actually print money[1], they just "transfer" money to banks who then do "things" with it. Its literally just numbers in a DB. [1] handling physical cash is expensive, slow and difficult. Not only is the price of movement relatively static regardless of the value, you hav…

> That's literally how the BoE works Not, it's not. It seems you and others are confused here and do not understand what is meant by "digital currency". Digital currencies, like what is discussed and e.g. the "digital yuan" in China, it to create real digital bank notes / coins. Not expert by I think similar to a crypto token. It means I can hold a digital bank note and pay you by transferring it to you. This is very…

> It seems you and others are confused here and do not understand what is meant by "digital currency"

You started of staying "currency is not digital", a broad statement about which I don't think there's any confusion, it's just flat-out incorrect. If it's not digital then what is it then, analogue?

Now you're talking about a particular form of digital token, which OK, maybe currency isn't that, and the usefulness of that isn't given. Saying "currency isn't digital because it's not this token" is like saying ".png files aren't digital because they're not .mp3s". It's still numbers in computers. You know, digital.

Re: Bank of England to explore a potential Central Bank Digital Currency

#102

Post by captn3m0 »

dools wrote: post #62
KaiserPro wrote: post #30

I've not really understood the need for a "digital" pound, the pound is pretty digital already. I can already have an entirely digital bank account from at least three "challenger" banks. There are also now at least two business accounts that also entirely virtual. "Faster Payments" (customer bank transfers) are delivered in seconds. I can see a need for speeding up BACS, and reducing the price of CHAPS, but apart fr…

The important distinction is that currently all cashless payment systems are privately run for profit which is effectively a regressive transaction tax.

So would switching it to a non-profit government body? NPCI (India's quasi-government retail payments infrastructure company) is a non-profit and they're looking to switch to a for-profit.

It worked quite well, I'd say.

Re: Bank of England to explore a potential Central Bank Digital Currency

#103

Post by Broken_Hippo »

mytailorisrich wrote: post #69
KaiserPro wrote: post #57

Earlier quoted context omitted.

That's literally how the BoE works. when you do a bank transfer, do you think they physical cash? When the BoE does quantitative easing, they don't actually print money[1], they just "transfer" money to banks who then do "things" with it. Its literally just numbers in a DB. [1] handling physical cash is expensive, slow and difficult. Not only is the price of movement relatively static regardless of the value, you hav…

> That's literally how the BoE works Not, it's not. It seems you and others are confused here and do not understand what is meant by "digital currency". Digital currencies, like what is discussed and e.g. the "digital yuan" in China, it to create real digital bank notes / coins. Not expert by I think similar to a crypto token. It means I can hold a digital bank note and pay you by transferring it to you. This is very…

You say, "Real, digital bank notes" but really, they are just numbers that you can write down if you want. That number is worthless unless you do the digital transfer (ie telling bank/service to do something). Realistically, it is no different. I can do all of this stuff with a bank, and person to person transfers are easy where I'm at. You are still interacting with a company or government to move your money around - and doing the same if you are receiving money. It doesn't really matter that it isn't your bank, even if you hate your bank. You have to do this even if you pay cash for a piece of used furniture: Most employers do not pay in cash.

The only real benefit to this system is that it would probably be run by a government agency and as such, would theoretically make it available to everyone. This would reduce the cost of being unbanked in the US and probably improve lives. Honestly, though, you could just make basic banking available for everyone so they can get paid, pay bills online, and shop easily - it'd likely prove to be more cost effective.

Re: Bank of England to explore a potential Central Bank Digital Currency

#104

Post by tumetab1 »

KaiserPro wrote: post #30

I've not really understood the need for a "digital" pound, the pound is pretty digital already. I can already have an entirely digital bank account from at least three "challenger" banks. There are also now at least two business accounts that also entirely virtual. "Faster Payments" (customer bank transfers) are delivered in seconds. I can see a need for speeding up BACS, and reducing the price of CHAPS, but apart fr…

A good example why current currencies are not digital, like Bitcoin, is the settlement process of a public trade stock which takes 2 days because of the current financial system.

A digital currency would make possible to settle a trade stock in minutes or even seconds.

A digital currency would remove a lot of transactions costs associated with buying/selling stocks.

Re: Bank of England to explore a potential Central Bank Digital Currency

#105

Post by synnejye »

ObserverNeutral wrote: post #92
throw1234651234 wrote: post #87

Earlier quoted context omitted.

Someone explained this to me last year with an example, and it 'clicked'. The idea is to let the government control the 'velocity of money'. For example, the US is giving out stimulus checks for COVID - the clear goal is to keep business afloat and people spending, but what if they just put the money into savings or crypto? The government did not achieve their goal. To achieve their goal, they program the money with…

Japan tried this in the 90s with expiring vouchers, results were subpar. The bailwick of Jersey sent citizens a prepaid card with £100 expiring in 6 monhts which was also disabled for ATM withdrawls during 2020. Again moderate results. Money is a unit of account, if you mess with it people adjust quickly, there is no free lunch. It's not the same as giving Wellbutrin+Ritalin to somebody who is depressed.

Then they must have be doing something wrong? Obviously people would not be foregoing free money if it was easy to get. You are arguing that people would not spend "free" 100 usd on their rent if the money/voucher was directed towards rent.

Re: Bank of England to explore a potential Central Bank Digital Currency

#106

Post by aseerdbnarng »

dools wrote: post #61
aseerdbnarng wrote: post #58

What I believe the BOE is exploring is for each citizen to have an account with the BOE and the potential for the types of money that can be used in this parallel banking system. If we think of the financial system as plumbing, the central bank has direct pipes to banks but rarely to citizens. This is not usually a problem except when you need to do a big emergency stimulus push not having direct pipes to individuals…

The government doesn’t need everyone to have an account at the central bank in order to deposit money directly into their account. QE doesn’t stimulate the economy because bonds and reserves are functionally identical as far as bank capital requirements are concerned and reducing interest rate payments is deflationary.

>The government doesn’t need everyone to have an account at the central bank in order to deposit money directly into their account.

It does make it a lot easier. The US, for example, was issuing stimulus cheques because there was no way to directly transfer funds into bank accounts. The UK had the same problem, so they pushed their stimulus through employers. In both cases there was no direct pipe from the central bank to the intended recipient which is what I think is most of what BoE is trying to achieve.

QE was the equivalent of using a waterfall to put out a candle. If you squint hard enough and get drunk on supply-side wonk-juice you could convince yourself it worked.

Re: Bank of England to explore a potential Central Bank Digital Currency

#107

Post by misja111 »

tumetab1 wrote: post #104
KaiserPro wrote: post #30

I've not really understood the need for a "digital" pound, the pound is pretty digital already. I can already have an entirely digital bank account from at least three "challenger" banks. There are also now at least two business accounts that also entirely virtual. "Faster Payments" (customer bank transfers) are delivered in seconds. I can see a need for speeding up BACS, and reducing the price of CHAPS, but apart fr…

A good example why current currencies are not digital, like Bitcoin, is the settlement process of a public trade stock which takes 2 days because of the current financial system. A digital currency would make possible to settle a trade stock in minutes or even seconds. A digital currency would remove a lot of transactions costs associated with buying/selling stocks.

The stock trade settlement time has little to do with the financial system, but more with how stock trading is organised.

There are quite a few steps before actual stocks can change hands. For instance the seller could have sold without actually owning the stocks, it might be he even can't deliver them, in which case the clearing will have to take care of that, etc. All these steps could have been automated long ago if the will was there, the reason they haven't is not because of the currency used but because of traditional common practice and legacy reasons.

Re: Bank of England to explore a potential Central Bank Digital Currency

#108

Post by mytailorisrich »

SideburnsOfDoom wrote: post #101
mytailorisrich wrote: post #69

Earlier quoted context omitted.

> That's literally how the BoE works Not, it's not. It seems you and others are confused here and do not understand what is meant by "digital currency". Digital currencies, like what is discussed and e.g. the "digital yuan" in China, it to create real digital bank notes / coins. Not expert by I think similar to a crypto token. It means I can hold a digital bank note and pay you by transferring it to you. This is very…

> It seems you and others are confused here and do not understand what is meant by "digital currency" You started of staying "currency is not digital", a broad statement about which I don't think there's any confusion, it's just flat-out incorrect. If it's not digital then what is it then, analogue? Now you're talking about a particular form of digital token, which OK, maybe currency isn't that, and the usefulness of…

Guys, please try to read about "digital currency" before writing snarky replies and downvoting.

Currency is currently not digital in the sense meant here. Otherwise the BoE and other central banks would not discuss the possibility of issuing digital currency. It's rather the banks' ledgers and transfer instructions that are digital.

In my previous comment I have only tried to explain what CBDC is. Perhaps I did not do a good job if so please feel free to provide a better explanation that would benefit everyone.

> "currency isn't digital because it's not this token

I have not written that, so I think you do not understand the topic. Here for reference to start with:

https://en.wikipedia.org/wiki/Central_bank_digital_currency

Re: Bank of England to explore a potential Central Bank Digital Currency

#109

Post by selfhoster11 »

bitcoinmonger wrote: post #40
KaiserPro wrote: post #30

I've not really understood the need for a "digital" pound, the pound is pretty digital already. I can already have an entirely digital bank account from at least three "challenger" banks. There are also now at least two business accounts that also entirely virtual. "Faster Payments" (customer bank transfers) are delivered in seconds. I can see a need for speeding up BACS, and reducing the price of CHAPS, but apart fr…

This will be good for anyone interested in using modern cryptocurrencies, whilst also allowing governments to control access to accounts and adjust the money supply if necessary. It's a win-win for everyone. Also the energy required to secure the ledger will be dramatically reduced. Proof of work can be replaced by physical security, which is more energy efficient. Anyone wanting to rewrite the ledger would need more…

> whilst also allowing governments to control access to accounts and adjust the money supply if necessary. It's a win-win for everyone.

In what way is more government surveillance and control over accounts a win for the average citizen? The rich will always find a way like they do with taxes, and it's the average person that suffers every time.

Re: Bank of England to explore a potential Central Bank Digital Currency

#110

Post by selfhoster11 »

jfjfntntkt wrote: post #72
KaiserPro wrote: post #30

I've not really understood the need for a "digital" pound, the pound is pretty digital already. I can already have an entirely digital bank account from at least three "challenger" banks. There are also now at least two business accounts that also entirely virtual. "Faster Payments" (customer bank transfers) are delivered in seconds. I can see a need for speeding up BACS, and reducing the price of CHAPS, but apart fr…

Please tell me how I can transfer one pound from me to you using a 20 line Python script? That's what people mean by digital currency. If you are going to mention the open banking API initiative, then what are the requirements to get access to that? You can't as an individual. Also, this was the easy case, inter-UK. Now tell me how to transfer using Python and without applying to all kinds of regulators for API acces…

Starling in the UK already supports that (for individual, mere-mortal customers) if you are sending money to an existing payee. There is at least a couple of fintech startups that offer sending money (or even full-blown all-digital bank accounts) using a HTTP API call if you're a business.
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