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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

#161

Post by bobthepanda »

TheBlight wrote: post #147
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…

>I've not really understood the need for a "digital" pound, the pound is pretty digital already. The need isn't for the consumer. It's advantageous for the central bankers. With it they can more easily control demurrage/inflation/deflation/confiscation (like the Chinese government plans to do with the e-RMB).

How is it different from what we currently have, assuming that digital pounds/dollars/whatevers are convertible with existing currency? Is existing currency not issued digitally?

When central banks issue cash now are they literally sending billions of dollars to the mint, trucking it off to a bank, and then the bank records it on a digital ledger? Seems wasteful.

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

#162

Post by yunesj »

rvense wrote: post #120
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.

It's also just a control thing. When private enterprises control (and create) money, they will do so based on their own interests. These might not align with the best interests of society at large.

Is it really your experience that the market fails to cater to the interests of the people, and politicians are uniquely capable of it?

Politicians can’t print a dollar without abusing it to promote religion (“In God We Trust”), funding war, or handing it out to get reelected.

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

#163

Post by rahimnathwani »

A bunch of comments in this thread claim that the pound is already digital, because you can send and receive pounds using a mobile app or online banking. But these transactions simply transfer obligations (debts) denominated in pounds between parties. They are not operations on actual pounds (i.e. on the central bank currency).

You can trade 'pork bellies futures' quickly, and using nothing but a computer. But no one claims pork bellies are digital. When people trade, they're effectively trading IOUs, and not the actual bellies.

A Central Bank Digital Currency would allow individuals to hold and transfer 'real' pounds (M0). Currently, only banks and selected other financial institutions can open accounts at the Bank of England.

If you think you (an individual) can currently hold digital pounds, just because you have a bank account, consider this question. If you have 200k GBP in your bank account, and the bank goes bust, will you still be able to withdraw 200k GBP?

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

#164

Post by JumpCrisscross »

bobthepanda wrote: post #161
TheBlight wrote: post #147

Earlier quoted context omitted.

>I've not really understood the need for a "digital" pound, the pound is pretty digital already. The need isn't for the consumer. It's advantageous for the central bankers. With it they can more easily control demurrage/inflation/deflation/confiscation (like the Chinese government plans to do with the e-RMB).

How is it different from what we currently have, assuming that digital pounds/dollars/whatevers are convertible with existing currency? Is existing currency not issued digitally? When central banks issue cash now are they literally sending billions of dollars to the mint, trucking it off to a bank, and then the bank records it on a digital ledger? Seems wasteful.

> Is existing currency not issued digitally?

It is, but it's restricted. M0 is central bank money [1]. Currently, only financial institutions have it. If the public could open accounts at the BoE, they too could own M0.

CBDCs are a way to give the public M0 without putting the central bank into the retail banking business. That gives central banks powerful new levers. For example, cash limits how negative rates can go. If cash were to become scarce and most money were held as M0, the central bank could enforce negative interest rates by clawing back M0.

Negative rates are feasible today. But were they to go sharply negative, they'd hit bank capital. Having the public directly hold M0 removes that side effect.

[1] https://www.investopedia.com/terms/m/moneysupply.asp

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

#165

Post by suprfsat »

rahimnathwani wrote: post #163

A bunch of comments in this thread claim that the pound is already digital, because you can send and receive pounds using a mobile app or online banking. But these transactions simply transfer obligations (debts) denominated in pounds between parties. They are not operations on actual pounds (i.e. on the central bank currency). You can trade 'pork bellies futures' quickly, and using nothing but a computer. But no one…

Are British bank accounts not FDIC insured?

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

#166

Post by JumpCrisscross »

suprfsat wrote: post #165
rahimnathwani wrote: post #163

A bunch of comments in this thread claim that the pound is already digital, because you can send and receive pounds using a mobile app or online banking. But these transactions simply transfer obligations (debts) denominated in pounds between parties. They are not operations on actual pounds (i.e. on the central bank currency). You can trade 'pork bellies futures' quickly, and using nothing but a computer. But no one…

Are British bank accounts not FDIC insured?

> Are British bank accounts not FDIC insured?

No. They are protected by the FSCS [1].

[1] https://en.wikipedia.org/wiki/Financial_Services_Compensatio...

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

#167

Post by [deleted] »

rvense wrote: post #120
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.

It's also just a control thing. When private enterprises control (and create) money, they will do so based on their own interests. These might not align with the best interests of society at large.

[deleted]

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

#168

Post by TheBlight »

bobthepanda wrote: post #161
TheBlight wrote: post #147

Earlier quoted context omitted.

>I've not really understood the need for a "digital" pound, the pound is pretty digital already. The need isn't for the consumer. It's advantageous for the central bankers. With it they can more easily control demurrage/inflation/deflation/confiscation (like the Chinese government plans to do with the e-RMB).

How is it different from what we currently have, assuming that digital pounds/dollars/whatevers are convertible with existing currency? Is existing currency not issued digitally? When central banks issue cash now are they literally sending billions of dollars to the mint, trucking it off to a bank, and then the bank records it on a digital ledger? Seems wasteful.

The Chinese government explicitly states the new e-RMB will help them prevent money laundering, tax evasion, and "terrorism financing." The better question is, why is the current system insufficient for addressing these problems?

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

#169

Post by bobthepanda »

TheBlight wrote: post #168
bobthepanda wrote: post #161

Earlier quoted context omitted.

How is it different from what we currently have, assuming that digital pounds/dollars/whatevers are convertible with existing currency? Is existing currency not issued digitally? When central banks issue cash now are they literally sending billions of dollars to the mint, trucking it off to a bank, and then the bank records it on a digital ledger? Seems wasteful.

The Chinese government explicitly states the new e-RMB will help them prevent money laundering, tax evasion, and "terrorism financing." The better question is, why is the current system insufficient for addressing these problems?

Hm. I meant to reply to the parent, not you, so that's my bad; but I probably fat-fingered it.

If they are in control of digital currency then they have a ledger of transactions, maybe? and if you have a 1:1 record of every single ledger then it's a bit harder to obfuscate?

Banks & businesses keep ledgers like these, but you have to 1. get your hands on it and 2. in case of multiple sets of books, you need to find the correct one. And then you have to connect all the dots.

Chinese capital and lending controls are very strict but this hasn't stopped Chinese and others to try and move money out of China. China has had repeated issues with things happening beyond regulators' reach until they become too big to hide and then have to be unwound, like excessive use of shadow banks for lending.

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

#170

Post by rahimnathwani »

suprfsat wrote: post #165
rahimnathwani wrote: post #163

A bunch of comments in this thread claim that the pound is already digital, because you can send and receive pounds using a mobile app or online banking. But these transactions simply transfer obligations (debts) denominated in pounds between parties. They are not operations on actual pounds (i.e. on the central bank currency). You can trade 'pork bellies futures' quickly, and using nothing but a computer. But no one…

Are British bank accounts not FDIC insured?

Even if UK banks were covered by FDIC (which covers only US banks), the limit is $250k (less the 200k GBP I mentioned in my comment).

The UK equivalent is capped at 170k GBP per account-holder: https://www.moneysavingexpert.com/savings/safe-savings/

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