Bank of England to explore a potential Central Bank Digital Currency • Hacker News Board

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

#121

Post by rvense » Mon, Apr 19, 2021, 2:45 PM UTC

KaiserPro wrote: post #75

dools wrote: post #62

Earlier quoted context omitted.

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

I understand your point and sympathise, but Handling cash isn't free. yes, for small traders and personal use, cash is effectively free. but as soon as you start to put it into the bank, it incurs a cost. Depending on where you are, this cost might be hidden from you. (banking in the USA for example is expensive compared to the UK) However as you point out, those companies that provide PoS terminals take either a mon…

> I understand your point and sympathise, but Handling cash isn't free.

Neither are roads, railways, wastewater treatment, communication lines or electricity. Money is infrastructure, and it makes sense for government to control and subsidize these to secure free and equal access, as well as ensure that developments of them occur in ways that benefit all members of society.

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

#122

Post by bitcoinmonger » Mon, Apr 19, 2021, 2:48 PM UTC

selfhoster11 wrote: post #109

bitcoinmonger wrote: post #40

Earlier quoted context omitted.

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.

I don't think we want to live in a society where individuals have complete control over their money, which is was cryptocurrencies like Bitcoin enable.

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

#123

Post by rvense » Mon, Apr 19, 2021, 2:50 PM UTC

stunt wrote: post #74

veritascap wrote: post #41

Earlier quoted context omitted.

The reason for a CBDC are new features. Money that can be programmed to only be used in certain ways, with certain groups, or at certain times, e.g. expiring money. It’s more nudging power for our unelected technocrat dear leaders. Imagine the possibilities!

The only thing this has in common with Bitcoin is "digital". The rest is pretty much opposite of what Bitcoin was supposed to be. (And I say "was supposed to be" because everyone has a different idea about what Bitcoin is today. But that's not related to this discussion here.)

I don't think anyone could credibly claim that Bitcoin is what it set out to be. The original paper calls it "electronic cash" and in its introduction describes private people using it for small transactions, replacing trust with cryptography. I would hope that a CBDC shares that original goal of replacing cash, though to what extent cryptography will be involved I'm not sure. (I do doubt BoE are just going to fork the Bitcoin code and spin up their own blockchain.)

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

#124

Post by ObserverNeutral » Mon, Apr 19, 2021, 3:07 PM UTC

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.

> 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.

Actually reserves are slightly better!

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

#125

Post by ObserverNeutral » Mon, Apr 19, 2021, 3:11 PM UTC

bitcoinmonger wrote: post #42

Nursie wrote: post #14

Earlier quoted context omitted.

Just no. Hard money is not desirable. Whatever comes out of this "the country's money supply should be determined by some cryptobros" is not going to be the result.

Agreed. The money supply should be flexible to help alleviate the effects of inevitable financial crashes. This of course devalues the savings of the average person when this happens, but it's the only way to recover from mistakes like the mortgage bubble.

> Agreed. The money supply should be flexible to help alleviate the effects of inevitable financial crashes.

In reality, you either do it in secret...or it makes the crash even worse because people would be even more risk averse because they see the government using these non conventional tool...hence "it must be pretty bad, better save some more"

QE is the quintessential example of this. The only American who benefitted from QE was Bernanke, so he got to be hailed as a hero and now everybody genuflects to him and uses his "playbook".

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

#126

Post by KaiserPro » Mon, Apr 19, 2021, 3:29 PM UTC

selfhoster11 wrote: post #112

KaiserPro wrote: post #80

Earlier quoted context omitted.

> open banking API initiative as you've alluded to, its not open to consumers, only financial institutions, with good reason. It gives you lots of access to do all sorts of things. > how I can transfer one pound from me to you using a 20 line Python script? Now this isn't a usecase I had thought about. I mean there are APIs that I can use to interface to a specific bank that will allow me to do this. But they are hid…

> as you've alluded to, its not open to consumers, only financial institutions, with good reason. It gives you lots of access to do all sorts of things. How so? There's no reason a bank account shouldn't be programmable. If the worry is fraud and account hacks, that already happens when the computer is compromised or people get scammed.

> There's no reason a bank account shouldn't be programmable

Agreed.

But until we have a better system of plainly showing access levels to one's account its a scammer paradise to allow access via said API.

You and I are educated in the world of API access, so will think twice before clicking "agree" to allowing emoji corp access to my bank account to "verify your identity", but a significant number of people would blindly click allow. Until we have either educated the public, or made an access GUI that stops 99.9% of that kind of use case, its just not worth the hassle.

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

#127

Post by KaiserPro » Mon, Apr 19, 2021, 3:31 PM UTC

mytailorisrich wrote: post #108

SideburnsOfDoom wrote: post #101

Earlier quoted context omitted.

> 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 d…

Sorry I had confused your statement to mean shipping physical currency about.

your clarifications were helpful

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

#128

Post by pjc50 » Mon, Apr 19, 2021, 3:41 PM UTC

tim333 wrote: post #119

leg100 wrote: post #68

Earlier quoted context omitted.

Don't forget the guinea: equal to a pound and a shilling, or 21 shillings, for the purposes of bidding for a racehorse.

Also the British Sovereign with a nominal value of a pound an an actual value of about £320 judging by ebay https://www.ebay.co.uk/sch/i.html?_from=R40&_trksid=p2334524...

I see the scams are out in force selling "gold (plated) sovereign".

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

#129

Post by danlugo92 » Mon, Apr 19, 2021, 3:45 PM UTC

sgt101 wrote: post #6

cblconfederate wrote: post #2

Central banks are going fintech. Now the global currency wars can begin

Well - they began in about 1914 when the UK got out of the gold standard. Very good essay by Adam Tooze about the recent shots fired. https://foreignpolicy.com/2021/04/01/janet-yellen-mario-drag...

Paywalled.

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

#130

Post by KaiserPro » Mon, Apr 19, 2021, 3:52 PM UTC

bitcoinmonger wrote: post #100

KaiserPro wrote: post #63

Earlier quoted context omitted.

You would be politely asked why you were in a restricted area, and asked to leave. Currency is based on trust. Trust that the ledger is correct, auditable and matches up. but to address your question, its possible to unilaterally reverse a payment, but as you'll then have to tell the clearing house to reverse the transaction, you'll need to get authorization from thirdparty, which is tricky. Moving money around insid…

How do you know that I won't steal funds from your account? Do you simply trust that I won't, and that your bank trusts me not to do so? I suppose the question is, what's stopping me? Trust or security?

In truth? I don't think your competent enough to get that far.

but more deeply its both trust security, and legal liability.

First you need to gain access to the system in the first place. Then you need to have unfettered access and be undetected. Considering this has been the number one ledger attack since the beginning of time (which is why tally sticks were a thing, and double entry book keeping) There are lots of systems in place to stop, detect or alert. Not only that you have the statement generating system which sends out physical copies of the account monthly.

Second we would need clearing houses to not notice that there is a mismatch in funds.

third when you try to extract that cash, we'd need the money laundering alarms to not go off. Which, if you've tried to buy a house in the UK, you know is not at all trivial.

You have to realise that the banking system is reliant on a bunch of very bored, highly motivated, fresh out of uni graduates to tally, move and generally be the grease that moves capital about. They will have tried all sorts of tricks to cheat, scam & salami slice money. There is a huge amount of effort going on to stop, detect and deflect fraud. Mainly because the banks are liable for it.

So for standard bank accounts, the chance of someone getting access to a server and changing the values of my account and not being detected are pretty limited. Not impossible, but small.

And thats the key. If the bank cocks up, the law is very much on my side as a consumer. the bank will be compelled to reverse the fraud. If they don't they get fined and or loose their license (although in practice, I don't think thats likely.)

With zero trust, if someone cocks up a digital contract and someone extracts the entire escrow value, game over. no recourse, other than to try and take the perp to court.