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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

#241

Post by hosker4u »

Mauricebranagh wrote: post #137
codeulike wrote: post #8

They should make it work on the 'old money' system of penny, shilling and pound, with twelve pence to a shilling and twenty shillings to the pound, then use the abbreviation 'd' for pence, and then throw in farthings (quarter penny) and half-crowns (two shillings and six pence) because if there's one thing I've learnt about finance, its that the more confusing things are, the easier it is to make a profit.

I suspect some of there more out there "brexiteers" would like that - I have seen calls for returning to imperial units FFS!

I'd take it over the Euro.

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

#242

Post by Ericson2314 »

aww_dang wrote: post #173
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.

It is about giving more control to central bankers. Going fully cashless will make negative rates impossible to avoid. UBI can be more specifically targeted as well. Generally speaking, the money supply exceeds the total amount of cash in most countries.

Yeah really looking forward for UBI being "one click away", and ditching privatized crap like Venmo.

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

#243

Post by Barrin92 »

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).

it would also be pretty beneficial for consumers. Cutting every payment middleman out and having one consistent means of exchange across an entire currency zone would be great.

Settle everything instantly, no charges, no withdrawal fees converting between cash and digital. The cost of running the system are probably minimal compared to what the entire consumer-banking sector collects.

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

#244

Post by fomine3 »

kolinko wrote: post #143
KaiserPro wrote: post #126

Earlier quoted context omitted.

> 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 bl…

> 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. Nobody says such API would be connected to a person's life holdings. It could be low amounts that are safe to lose in case of a hack. Of course, you need to educate people to not put all their life savings into those accounts. But the same applies to multiple other services.

It looks like "Serveless is wrong word!" discussion. (I agree both)

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

#245

Post by Kiers88 »

Kiers88 wrote: post #230

I don't see how digital currency based on bitcoin architecture will be attractive to banks AT ALL. AT ALL. You can't "double spend" bitcoin, which is the sine qua non of BANKING! You can't "create" bitcoin into existence to make a loan as banking does all the time. What is this canard of CBDC....i don't understand what their game is!

what was so wrong with my comment? already voted down? by who and for what? are we supposed to "rah-rah" the tech being pushed here without thinking?

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

#246

Post by arcticbull »

bingbong70 wrote: post #236
arcticbull wrote: post #217

Earlier quoted context omitted.

Inflation isn't a tax on savings because you're not supposed to be saving currency. You're supposed to be saving value by investing currency. That's how currency works: it retains value only for as long as necessary. Investments, on the other hand, retain value in the long run. No need to conflate the two. In fact it's a harmful narrative to try and conflate the two. This is a pretty fundamental misunderstanding of m…

>Inflation isn't a tax on savings because you're not supposed to be saving currency. It is a tax on savings whether currency is "supposed" to be saved or not. All retail banks offer savings accounts specifically for this purpose.

It's a "tax" on un-invested capital, sure, in the same way a fine is a "tax" on undesirable behavior.

I think tax is the wrong word because a tax implies a kind of tithe on top of desirable behavior. A fine implies that you are being penalized for undesirable behavior. I think the latter is a more apt description.

Your mattress full of hundos is detrimental to the economy and you are being fined for maintaining it.

Savings accounts are not an example of unproductive capital because they collateralize loans. That's why they're not subject to the inflationary haircut. They're not particularly productive hence the low return, which may be below inflation. However, that's an ROI below benchmark, not inflation. i.e. savings accounts are just a bad investment. Bad investments will exist in any market conditions.

Personally I maintain a small cash buffer in a savings account and I pay the (small) delta between inflation and interest rate as a fee for liquidity.

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

#247

Post by laurencerowe »

jcfrei wrote: post #240
laurencerowe wrote: post #216

Earlier quoted context omitted.

While deposits up to some amount are guaranteed FSCS, in reality the government simply can't stand by while there's a run on a consumer bank. Northern Rock was nationalized when this happened in 2008. Even with the FSCS, customers don't want to risk their money being inaccessible while they wait on their claim to be processed.

Now imagine a banking system where banks can go bust without savers (with just cash on their accounts) having to worry. The aftermath of the global financial crisis would have been quite a bit different: Fewer bankers getting a bailout and more shareholders of big banks actually being held accountable for the unduly risk they took. The fact that a lot of people's money is debt on the balance sheet of a bank creates d…

Wasn't that the case with Lehman's? No savers affected yet still precipitated a huge crisis. Too big to fail.

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

#248

Post by laurencerowe »

ObserverNeutral wrote: post #238
laurencerowe wrote: post #235

Earlier quoted context omitted.

The Eurozone crisis that followed the Great Recession resulted from the structure of the Euro, which had removed the option for countries in the Eurozone to monetize their debt, creating a default risk, forcing them to inflict disastrous austerity on their economies and lengthening the recession. While US states saw similar affects on their budgets (since they are not allowed to run deficits) this was offset by large…

Money is a unit of account. You like to see human agency in the resolution of the crisis. In my opinion that's not the case, all the interventions and the tinkering of the unit of accounts and messing with the plumbing of the money markets has a neutral effect. Wallace Neutrality and Miller-Modigliani prove this mathematically. You also have to take into account the extreme worry if not outright panic that people hav…

Money is just a unit of account. But without enough of it the system gums up and people are left unemployed. We moved on from the gold standard for good reason.

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

#249

Post by bobthepanda »

JumpCrisscross wrote: post #164
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.

> 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 g…

I'm still not sure I understand. How would a citizen be issued CBDC if not through an account?

Also, wouldn't this widespread use require in-kind withdrawal of cash from circulation to have any real effect?

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

#250

Post by hakfoo »

betterunix2 wrote: post #224
analog31 wrote: post #185

Earlier quoted context omitted.

Likewise, explain how it works securely in fewer than 20000 words to a non-mathematician. that's what people mean by currency. ;-)

That is kind of like insisting that you explain why paper money is hard to forge in less than 20k works to a non-chemist.

That's a trivial challenge. You can rely on things that people are instinctively familiar with.

Look at the current £10 note. To even start on getting a "close enough" material (the feel of the polymer, the clear windows), you're looking at acquiring specialized print stock they don't exactly stock at the Office Supply Warehouse down the street. Now, how exactly are you going to transfer a design to it? Conventional CMYK inkjet and laser-- if you can get it to stick, are going to be a dotty, indistinct mess. Heat-transfer might bake the colour in, but would probably wreck the material and be blurry and smudgy. Once you've figured that out, try to figure out how you can precision-cut and apply holographic foil and optically-variable panels. Now scale it up to the point where it's economically viable.

If you've used a printer before, you know it's not going to be capable of cranking out a convincing banknote.

For consumer acceptance, it's important that people can directly trust the system. I'm concerned that "here's some papers that if I go to my local university, there might be a few experts in the math department who can parse them and tell me it's trustworthy" won't have quite the same impact as "look at the fine lines making up the portrait of Jane Austin, you know that's not coming out of your HP DeskJet."

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