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

#261

Post by neilwilson » Tue, Apr 20, 2021, 11:55 AM UTC

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…

Banks can always go bust without savers being affected. You have a well documented resolution procedure for banks, which involves the shareholders taking a bath and HM Treasury recapitalising the bank using the Contingencies Fund.

It is for the Bank of England to take the loss, not the depositors, since the Bank of England is regulating the banks.

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

#262

Post by neilwilson » Tue, Apr 20, 2021, 11:56 AM UTC

rahimnathwani wrote: post #207

danialtz wrote: post #191

Earlier quoted context omitted.

You have a point here, but sadly most of the current state of art in CBDC research avoids storing accounts at Central Banks due to the obvious risk of disintermediating banking system. The points of others thread stays: what is the point of CBDC for individuals if the supply is not limited and not stored at Central banks...

I'm not up to date with the state of the art, but the March 2020 paper from the Bank of England seemed clear that balances would be held on a ledger at the Bank of England. Whether the balances on this ledger would be assigned to specific beneficiary owners, or only to intermediaries (like retail banks) wasn't clear. But, in either case, only the central bank could issue/mint new balances.

It's just bank accounts at the Bank of England - something the BoE got out of in 2008.

Anything else drops down a money laundering black hole.

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

#263

Post by neilwilson » Tue, Apr 20, 2021, 11:59 AM UTC

aseerdbnarng wrote: post #106

dools wrote: post #61

Earlier quoted context omitted.

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 ba…

"The UK had the same problem"

The UK doesn't have the same problem. Our payments are entirely electronic, and there is a direct pipe from HM Treasury to every person with a Sterling bank account. The choice to run the furlough scheme via PAYE was political, not technological.

Our electronic transfer system is sufficiently sophisticated that the government can operate on a commercial bank account and have the money automatically transferred from a Contra account at the Bank of England.

The UK has some of the finest electronic banking facilities in the world.

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

#264

Post by thehappypm » Tue, Apr 20, 2021, 12:49 PM UTC

mandelbrotwurst wrote: post #229

thehappypm wrote: post #214

Earlier quoted context omitted.

Though this is intuitive it's not really true in a real sense because it's trivially easy to avoid this "tax". Any asset -- down to a humble CD -- will beat inflation. However, assets increasing in value also increases tax revenue due to capital gains!

1 year CD rates are currently about .65% in the US - well below inflation even if you’re talking Core CPI only.

Just looked and yeah, this is not a good moment for CDs (or high-yield savings accounts). I used to get over 1% from my Ally bank savings account. I suppose you can't beat inflation with CDs or savings accounts right now, though in a higher-interest environment you certainly could.

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

#265

Post by jokethrowaway » Tue, Apr 20, 2021, 2:32 PM UTC

xwolfi wrote: post #37

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 normal citizen is never gonna build a government that allows for anonymous payment systems. To often people speak of their government as completely abstract separated entity they can only submit to. But actually, they elect them and the government even follow them in their craziest follies, like, say, leaving the EU in the UK.

The influence you get with democracy is very limited.

I don't feel represented by any of the parties that have a chance to get into power.

Democracy is literally the majority ruling over the minority - the problem being that even that majority can pick between entities they agree with on some issues and not others.

Decentralisation of power is the only way to get control back to people and out of an elected oligarchy.

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

#266

Post by jokethrowaway » Tue, Apr 20, 2021, 2:35 PM UTC

KaiserPro wrote: post #53

xwolfi wrote: post #37

Earlier quoted context omitted.

A normal citizen is never gonna build a government that allows for anonymous payment systems. To often people speak of their government as completely abstract separated entity they can only submit to. But actually, they elect them and the government even follow them in their craziest follies, like, say, leaving the EU in the UK.

> To often people speak of their government as completely abstract separated entity they can only submit to. it is a compromise. I don't want to live in anarchy (sorry, a libertarian world) because like extreme communism it has inherent flaws. Thus I submit to being ruled by the UK government, and actively vote in elections. However as its a compromise, no present party with a chance of winning power reflects my view…

I share your feelings on government but, after reading The Machinery of Freedom, I believe anarchy is worth a shot.

I wonder if you would reconsider anarchy if there was a private system of entities providing government-like services and compete with each other.

http://daviddfriedman.com/The_Machinery_of_Freedom_.pdf

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

#267

Post by teslaberry » Tue, Apr 20, 2021, 7:55 PM UTC

I'm sure they'll have the city of london, BVI, grand cayman, jersey isle of man and the rest of the crimibanks using the 'digital' blabla in notime. gold is going to 2800$ an ounce before the next truly major crisis arrives, and political rules are enforced against ownership. we're not too far off. should be 2-3 years, late summer 2024ish. before then a major major market selloff and money printing cycle will occur again.

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

#268

Post by teslaberry » Tue, Apr 20, 2021, 7:56 PM UTC

gold is going to 2800$ before a digital pound happens. city of london, isle of man, jersey, bvi, grand cayman. where do you think they're going to bitcoin?

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

#269

Post by jaredtn » Wed, Apr 21, 2021, 12:13 AM UTC

betterunix2 wrote: post #225

throwaway3699 wrote: post #159

Earlier quoted context omitted.

I guess I'm more wondering what possible value such a tiny micropayment could be. There's no conceivable business that would charge in such small increments. Even an average ad impression is more than a penny. In fact, things are heading the other way, with "micro"-transactions in mainstream games sometimes exceeding the price of the game itself.

Actually, the value of such a tiny micropayment is negative -- it would cost more just to process such a small payment than the amount being paid.

Today, with our archaic system. That's why we need digital currencies.

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

#270

Post by bingbong70 » Wed, Apr 21, 2021, 12:51 AM UTC

arcticbull wrote: post #246

bingbong70 wrote: post #236

Earlier quoted context omitted.

>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. S…

I think you misunderstood my reason for stating this...

>All retail banks offer savings accounts specifically for this purpose.

Banks scam poor/middle-income people into paying the inflation tax by promoting these accounts and so does the government.

CPI is not the actual inflation rate and savings accounts pay nowhere near CPI. The money you have in your savings account is rotting and I'm not sure you realize it.

>That's how currency works: it retains value only for as long as necessary.

Poor people forced to live in cash are supposed to take a ~50% haircut in purchasing power every 5-10 years? I think if they understood the rate of devaluation they would not think it was as 'long as necessary'.