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Nobody’s using CBDCs – India’s piloting one anyway

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Re: Nobody’s using CBDCs – India’s piloting one anyway

#121

Post by screye »

fab1an wrote: post #12

It's surprising to see that there are liberal proponents of this. You don't have to be a raging libertarian to see the risks of unlocking this much financial reach for governments. We (in the West) may now mostly live under reasonable governments, but there's obviously no guarantee that this won't change (including towards your ), and implementing social credit score systems and other dystopian things would be much e…

Because societies function very differently in a dense & community driven country like India vs sparse nuclear nations like the US.

Once you reach a certain level of density, be that most of India or east-coast American cities, you have to rely on public services to facilitate most things in your life. The Govt. already has indirect financial veto power on you. This won't change anything the Govt. is already able to do everything that you claim CBDCs will facilitate.

Note that 90+% of India operates in a permanent survival mindset. All positives associated with libertarianism are much higher on Maslow's pyramid. These people are on the bottom rung, so the rights citizens would have to forfeit as part of CBDCs feel trivial.

Second, India is a low trust society. So, anything that increases tracking, surveillance and transparency is welcome. Trustless systems are welcome. Cash is easy (to launder) and cash is simple (to hide). The elimination of cash adds significant barriers to the most important facilitator of the low trust economy : cash.

Re: Nobody’s using CBDCs – India’s piloting one anyway

#122

Post by alkonaut »

kipchak wrote: post #77
alkonaut wrote: post #43

Earlier quoted context omitted.

Now you are assuming that "governments" and "citizens" are two disjoint groups with different agendas. That's a really bleak way of looking at it, at least in functioning democracies. I'd certainly protest loudly if some sort of anonymity wasn't part of the plan at every step. I was happy to see at least some footnotes from a recent pilot CDBC mentioning this. https://www.riksbank.se/globalassets/media/rapporter/e-kr…

From "Money and Payments: The U.S. Dollar in the Age of Digital Transformation" "Identity-verified: Financial institutions in the United States are subject to robust rules that are designed to combat money laundering and the financing of terrorism. A CBDC would need to be designed to comply with these rules. In practice, this would mean that a CBDC intermediary would need to verify the identity of a person accessing…

> a CBDC would differ materially from cash, which enables anonymous transactions.

Anonymous transactions are possible with a CDBC too. For example as outlined in the link I posted in the message above.

The idea is similar to Gnu Taler: you withdraw CBDC funds onto some physical "cash card". The amount you can do would be limited, just like the amount of cash you withdraw from a a bank is usually limited. But it does mean that how you then spend the tokens on that "cash card" should be as hard or harder to pin to an individual than a cash spend - i.e. nearly impossible.

Re: Nobody’s using CBDCs – India’s piloting one anyway

#123

Post by mitthrowaway2 »

philwelch wrote: post #110
mitthrowaway2 wrote: post #105

Earlier quoted context omitted.

Paper money still has a very important role, because it can't simply be deleted from your account. That's important, because central banks are considering negative interest rate policy, which would mean your bank account would drop by a percentage each month. This would drive people to spend or invest their money, supporting consumption and inflating asset prices. The reason they can't do that right now is because ma…

That’s horrifying and I have a hard time imagining that sort of thing happening in any functional democracy.

You might, but the central banks don't! It's a recurring theme in published research papers by economists and by the central banks themselves. It's called "breaking through the zero bound" on monetary policy, or "removing the effective lower bound". The tone in these papers is universally that this would be desirable for the central bank, but hard for the public to accept.

For example from the Fed: "The Case for Unencumbering Interest Rate Policy at the Zero Bound", https://www.kansascityfed.org/documents/7033/GoodfriendPaper...

> With these advantages in mind, the final portion of the paper describes in detail three methods by which the zero bound on interest rate policy can be unencumbered completely. The three methods in turn would: 1) abolish paper currency, 2) introduce a market-determined flexible deposit price of paper currency, and 3) provide electronic currency (to pay or charge interest) at par with deposits.

Or the Bank of Canada's paper, "Is a Cashless Society Problematic?", https://www.bankofcanada.ca/2018/10/staff-discussion-paper-2...

> a cashless society could open the door to the prospect of negative interest rates to a greater extent than is currently possible. Most central banks are obligated by law to supply cash to the general public. To the extent that the economy becomes cashless, a central bank could request a change in its governing legislation to remove the obligation to supply cash to the public on demand (which is a significant step). In that case, in the absence of cash and of an obligation to supply it, a central bank would be able to lower interest rates to a more negative level than is currently possible to achieve stabilization or price stability goals.

Re: Nobody’s using CBDCs – India’s piloting one anyway

#124

Post by verdenti »

matkoniecz wrote: post #35
chii wrote: post #26

Earlier quoted context omitted.

> So if someone missed this 17 days this sort of shit is what makes a gov't a low trust gov't. It exacerbates the informal economy - people would not want to pay taxes to fund such a govt, because they don't see that the gov't is running with their interest in mind (despite india being a so called democracy). It was a poorly thought-out policy.

> people would not want to pay taxes to fund such a govt that reminds me about another gem: > The use of demonetised banknotes was allowed for the payment of municipal and local civic body taxes, leading to a jump in their revenue collections.

No post body was provided.

Re: Nobody’s using CBDCs – India’s piloting one anyway

#125

Post by verdenti »

totalZero wrote: post #29
matkoniecz wrote: post #16

Remind me about https://en.wikipedia.org/wiki/2016_Indian_banknote_demonetis... > On 8 November 2016, the Government of India announced the demonetisation of all ₹500 and ₹1,000 banknotes > Several people were reported to have died from standing in queues for hours to exchange their demonetised banknotes.[180][181][182][183][184][185] Deaths were also attributed to lack of medical help due to refusal of demonetised b…

> The BSE SENSEX and NIFTY 50 stock indices fell over 6 percent on the day after the announcement. The move reduced the country's industrial production and its GDP growth rate. It is estimated that 1.5 million jobs were lost. Wow. They should have gone back to the drawing board after seeing their announcement lop off a huge chunk of their equity market capitalization.

No post body was provided.

Re: Nobody’s using CBDCs – India’s piloting one anyway

#126

Post by philwelch »

mitthrowaway2 wrote: post #123
philwelch wrote: post #110

Earlier quoted context omitted.

That’s horrifying and I have a hard time imagining that sort of thing happening in any functional democracy.

You might, but the central banks don't! It's a recurring theme in published research papers by economists and by the central banks themselves. It's called "breaking through the zero bound" on monetary policy, or "removing the effective lower bound". The tone in these papers is universally that this would be desirable for the central bank, but hard for the public to accept. For example from the Fed: "The Case for Unen…

> The tone in these papers is universally that this would be desirable for the central bank, but hard for the public to accept.

Yeah, that’s putting it mildly! Isn’t this basically a wealth tax on the middle and working classes?

Re: Nobody’s using CBDCs – India’s piloting one anyway

#127

Post by mitthrowaway2 »

philwelch wrote: post #126
mitthrowaway2 wrote: post #123

Earlier quoted context omitted.

You might, but the central banks don't! It's a recurring theme in published research papers by economists and by the central banks themselves. It's called "breaking through the zero bound" on monetary policy, or "removing the effective lower bound". The tone in these papers is universally that this would be desirable for the central bank, but hard for the public to accept. For example from the Fed: "The Case for Unen…

> The tone in these papers is universally that this would be desirable for the central bank, but hard for the public to accept. Yeah, that’s putting it mildly! Isn’t this basically a wealth tax on the middle and working classes?

Yes, on anyone who works to earn a wage rather than owning appreciating assets, basically.

I don't know, maybe it won't happen. But the signs are all pointing in that direction, so I'm kind of resigned to it going that way eventually. Probably it will start by restrictions on large cash transactions, and on owning or carrying large amounts of cash. Then fees for withdrawing paper cash from bank accounts. Perhaps retailers will be allowed to add fees for cash transactions, too. The last step would be deprecating cash altogether, allowing banknotes to be deposited but not withdrawn (withdrawals will be as a CBDC).

Just my guess on how it will go.

Re: Nobody’s using CBDCs – India’s piloting one anyway

#128

Post by matkoniecz »

rajup wrote: post #96
matkoniecz wrote: post #16

Remind me about https://en.wikipedia.org/wiki/2016_Indian_banknote_demonetis... > On 8 November 2016, the Government of India announced the demonetisation of all ₹500 and ₹1,000 banknotes > Several people were reported to have died from standing in queues for hours to exchange their demonetised banknotes.[180][181][182][183][184][185] Deaths were also attributed to lack of medical help due to refusal of demonetised b…

What has this got to do with TFA?

Both are weird and suspicious and complex financial operations done by Indian government on their citizens.

Re: Nobody’s using CBDCs – India’s piloting one anyway

#129

Post by kipchak »

alkonaut wrote: post #122
kipchak wrote: post #77

Earlier quoted context omitted.

From "Money and Payments: The U.S. Dollar in the Age of Digital Transformation" "Identity-verified: Financial institutions in the United States are subject to robust rules that are designed to combat money laundering and the financing of terrorism. A CBDC would need to be designed to comply with these rules. In practice, this would mean that a CBDC intermediary would need to verify the identity of a person accessing…

> a CBDC would differ materially from cash, which enables anonymous transactions. Anonymous transactions are possible with a CDBC too. For example as outlined in the link I posted in the message above. The idea is similar to Gnu Taler: you withdraw CBDC funds onto some physical "cash card". The amount you can do would be limited, just like the amount of cash you withdraw from a a bank is usually limited. But it does…

I don't disagree it's possible to have a CBDC and anonymity, but based on the fed's statements like the part you quoted it seems like from their perspective anonymity no longer being possible would be a feature.

Re: Nobody’s using CBDCs – India’s piloting one anyway

#130

Post by kipchak »

jqpabc123 wrote: post #114
kipchak wrote: post #87

Earlier quoted context omitted.

Isn't FedNow separate from CBDC proposals? Some overlap in purpose but different in function. https://www.pymnts.com/cryptocurrency/2022/cbdc-weekly-feds-...

Potato or po-tato. FedNow is the solution the Federal Reserve is proposing for a "digital dollar". It will only be used for inter-bank settlements.

FedNow seems to lack some of the juicier potential features of CBDCs, like negative interest rates for individuals in the same way a bank might have on it's account with a central bank.
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