What is the fuss over central-bank digital currencies?
11–20 of 148 posts
Re: What is the fuss over central-bank digital currencies?
#12Digital currencies allow for full tracking of every transactions and are a privacy nightmare. They allow applying negative interest rate on everybody and they would facilitate neverending hyperinflation (no need to print new bills at great expense). Hence they can't coexist with cash so say goodbye to cash. I don't like where we're going.
Sure, BTC and other popular ones work this way, but monero is completely anonymous (as long as senders don’t collude), so it’s not an inherit trait of crypto.
CBDC is half-transparent, it's a private database: the owner sees everything, people see nothing.
Re: What is the fuss over central-bank digital currencies?
#13Digital currencies allow for full tracking of every transactions and are a privacy nightmare. They allow applying negative interest rate on everybody and they would facilitate neverending hyperinflation (no need to print new bills at great expense). Hence they can't coexist with cash so say goodbye to cash. I don't like where we're going.
I buy pretty much everything with VISA or Paypal. If I want something to be private, I could do it with cash or a cryptocoin. I think it would be nice if govt (via crown-corp or some such) provided an alternative that I can choose to use sometimes. They might have a better privacy-policy than I'm getting from the big companies lol.
This might also open up new markets, e.g. micropayments, because govt could choose to eat the cost of this to enable some industries that right now cannot exist because transactions are too expensive.
Re: What is the fuss over central-bank digital currencies?
#14Important note: central bank digital currencies are not crypto currrencies. They are not block chains. They are not decentralized. They are not permissionless. I cannot find a record of any CBDC which clearly states that it want's to use any of these technologies. I'd be interested to be proven wrong.
Central bank digital currencies are essentially a new hybrid monetary/fiscal policy tool. Historically the Federal reserve and many other central banks function by buying and selling the debt of their sovereignty to influence interest rates. They pay for these securities by essentially creating money that didn't exist before and trading it to an institution for their debt security. For a long time this money has just been digital, when the Fed creates money to buy a bond from JP Morgan, all they do is to update a line in a database. So they already have a digital currency, but only for dealing with large institutions.
The idea of these new CBDCs is to setup a similar system but where the digital currency could be distributed to individual citizens. This would give the Fed a more powerful tool than it has ever had before because giving money directly to people is almost guaranteed to create real economic activity unlike adding to bank reserves(which is why we haven't seen meaningful inflation after 11 years of the Fed spamming reserve creation).
Some of this is lightly speculative but a detailed scheme which is almost exactly this was already proposed in a bill to congress, The Banking For All Act: https://www.congress.gov/bill/116th-congress/senate-bill/357...
I don't think it is hyperbolic to say that CBDCs are the "how" part of MMT. They take most of the logistical difficulties out of direct to citizen cash transfers and this is their primary goal.
Re: What is the fuss over central-bank digital currencies?
#15Digital currencies allow for full tracking of every transactions and are a privacy nightmare. They allow applying negative interest rate on everybody and they would facilitate neverending hyperinflation (no need to print new bills at great expense). Hence they can't coexist with cash so say goodbye to cash. I don't like where we're going.
Applying negative interest rates can be a good thing depending on what policy the central bank pursues, and they don't add to any risk of hyperinflation, because central banks if anything pursue price stability or targeted inflation as one of their policy goals. (and have been very good at it in fact, and digital cash changes no incentives here).
I personally have absolutely no problem with them and I'd be very glad if I could settle every transaction with a digital Euro. I don't particularly enjoy the middlemen in the form of countless payment processors who all take cuts out of transactions, and I don't really see what privacy or tracking burden applies that existing firms don't already engage in.
To me the payment infrastructure consisting of countless of private firms seems more like a relic of the past. Free, instant financial services to me are ideally a public utility in the same way the water or transport infrastructure is.
Re: What is the fuss over central-bank digital currencies?
#16Digital currencies allow for full tracking of every transactions and are a privacy nightmare. They allow applying negative interest rate on everybody and they would facilitate neverending hyperinflation (no need to print new bills at great expense). Hence they can't coexist with cash so say goodbye to cash. I don't like where we're going.
To the uninitiated some of what you say may sound like conspiracy thinking. But it’s really not. People in ECB have been talking along these lines for over a year. Here is the latest example. [1] The more you follow it the more it really seems like if the people in the ECB had their way they’d force everyone to live paycheck to paycheck and never save. They’ve been running negative interest rates and they don’t work (because they simply, empirically don’t). They won’t accept the empirical evidence and go back to the drawing board. Instead the problem in their minds is always they’ve never gone far enough! They want to keep doubling down and try to gain more and more centralized control of people’s money.
[1] https://www.bloomberg.com/news/articles/2021-02-10/ecb-s-pan...
Re: What is the fuss over central-bank digital currencies?
#17They are inherently dangerous, money as a service, with all associated risks. What's next? Car as a service? House as a service? Government as a service? Life as a service?
"Welcome To 2030: I Own Nothing, Have No Privacy And Life Has Never Been Better"
https://www.weforum.org/agenda/2016/11/how-life-could-change...
Some people call that utopia "technocratic collectivism", and others still salivate at the mere thought.
In any case, it's part of the "new normal" championed by Schwab's WEF.
Re: What is the fuss over central-bank digital currencies?
#18One benefit I didn't see mentioned was that central banks, being an arm of the government, presumably won't cut off payment processing for completely-legal-but-socially-unacceptable sites like private payment services do. I know this happens to porn artists/websites all the time, and recently it's been happening to political extremist sites like Parler etc. too.
A lot of that was due to government "suggestion": https://en.wikipedia.org/wiki/Operation_Choke_Point
Re: What is the fuss over central-bank digital currencies?
#19Digital currencies allow for full tracking of every transactions and are a privacy nightmare. They allow applying negative interest rate on everybody and they would facilitate neverending hyperinflation (no need to print new bills at great expense). Hence they can't coexist with cash so say goodbye to cash. I don't like where we're going.
Applying negative interest rates can be a good thing depending on what policy the central bank pursues, and they don't add to any risk of hyperinflation, because central banks if anything pursue price stability or targeted inflation as one of their policy goals. (and have been very good at it in fact, and digital cash changes no incentives here). I personally have absolutely no problem with them and I'd be very glad…
> I'd be very glad if I could settle every transaction with a digital Euro. I don't particularly enjoy the middlemen in the form of countless payment processors who all take cuts out of transactions
Are we sure those digital currencies would be handled directly and fully by the central bank at no (direct) fee per transaction? Who's to say that the way things currently work won't stay exactly the same, except for your Visa card being denominated in dEuros instead of Euros?
I may be a pessimist, but the way I see it, the current end-user facing financial system (retail banks and payment processors) are much too big and much too greedy to stand idly by while the central bank takes their pie away.
Re: What is the fuss over central-bank digital currencies?
#20Important note: central bank digital currencies are not crypto currrencies. They are not block chains. They are not decentralized. They are not permissionless. I cannot find a record of any CBDC which clearly states that it want's to use any of these technologies. I'd be interested to be proven wrong. Central bank digital currencies are essentially a new hybrid monetary/fiscal policy tool. Historically the Federal re…
If you really just want everyone to have access to banking, create post banking. [1] Then, if you really just want everyone to get monthly checks from the government, deposit them electronically. That’s all you need to do. This already works in many countries. It can even work in the US with a bit of spit and polish (we used to have a post banking service and it’s been proposed to be reinstated).