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Central Bank Digital Currencies are coming

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Re: Central Bank Digital Currencies are coming

#111

Post by chii »

est31 wrote: post #38
cuspy wrote: post #23

one frightening prediction I've heard is that we will have parallel economies. One for UBI consumer serfs who receive a monthly stipend that expires at the end of each month, another for people who work and receive payment perhaps in other independent currencies, and another, which already exists, for the very wealthy who hold wealth primarily in tangible assets like real estate and fine art. This will either fail sp…

The "UBI consumer serfs" already exist in Germany, because the government only pays you benefits if you don't have any property. The moment you start saving up your money, they stop payments and demand you to live from your savings instead.

But is that not a good way to encourage people to work and produce goods/services? UBI isn't there so you can live a comfortable life off the taxpayers, but as a safety net for accidents, bad luck and other unfortunates so that they don't die. But once they're back on their feet, they should be capable of restarting their productive life and no longer need social welfare.

Re: Central Bank Digital Currencies are coming

#112

Post by wan23 »

fh973 wrote: post #29
povik wrote: post #18

Are these proposed central bank “digital currencies” anything more than a centralised or federalised database of who-owns-how-many? And if so, how does that differ from what we have now? That is, in a European country, I have an account with my bank, and my bank has an account with the central bank (or the two interact in some other way). My understanding of the current system is limited, I merely know some large por…

I can half answer that and hope somebody can complete the story. What you have in your bank account is not digital cash. It's effectively a note that the bank owes you cash. This may sound like a technical detail but as far as I understood without physical money there would be no bank accounts. That's what I always wondered about: how could an economy go 100 percent electronic banking, if banking is built on the exis…

Cash is also not cash by that definition. A dollar bill is what is called a banknote, which represents that the bank (or really the government) owes you a dollar.

Re: Central Bank Digital Currencies are coming

#113

Post by enjeyw »

raziel2701 wrote: post #108

What is the difference between a digital currency and the digital money I see in my bank account online? It feels to me like I already transfer money digitally when shopping with a credit card. Later on that twitter thread he shares a poll by the IMF [0] where they ask you how will you be sending money to a family member in 5 years. The possible answers are cash in envelope, money transfer service, digital currency o…

A lot of existing digital money is more akin to a widely-redeemable voucher issued by a private company than it is to physical cash. You're free to use it in ways that are sanctioned by that issuing company, but if you want to do something like spend it with a competitor, you might run into road-blocks.

In places like the US, this feels like an academic difference, but that's because non-bank digital payments haven't really consolidated yet.

In Kenya, where one mobile phone company (Safaricom) has a 98.8% market share of digital payments, the situation is very different- effectively on private company has a monopoly on money. They can and do use this monopoly power to their advantage.

A CBDC attempts to shift money back to being a public good like physical cash, by guaranteeing interoperability between issuers, rather than everyone paying with casino chips.

Re: Central Bank Digital Currencies are coming

#114

Post by p1necone »

chii wrote: post #111
est31 wrote: post #38

Earlier quoted context omitted.

The "UBI consumer serfs" already exist in Germany, because the government only pays you benefits if you don't have any property. The moment you start saving up your money, they stop payments and demand you to live from your savings instead.

But is that not a good way to encourage people to work and produce goods/services? UBI isn't there so you can live a comfortable life off the taxpayers, but as a safety net for accidents, bad luck and other unfortunates so that they don't die. But once they're back on their feet, they should be capable of restarting their productive life and no longer need social welfare.

You shouldn't be forced to obliterate your retirement savings because you fell on hard times. Welfare should never be set up in a way that incentivizes people to be financially irresponsible.

Re: Central Bank Digital Currencies are coming

#115

Post by anm89 »

So I've been tracking this fairly closely via the Banking for All Act and I think a lot of the issues around this are not what they seem to be although I think they signal a very profound shift in the world of monetary politics.

For one this has NOTHING to do with crypto currency. This also has NOTHING to do with any kind of technological advancement at all. There is really nothing particularly more digital about the digital currencies being proposed than any other electronic bank balance or credit card database line item. I think the word digital here is an attempt to sneak in some radical changes to how the federal reserve works under the guise of doing something to modernize banking in the world of cryptocurrency.

So then what is this about? What these digital currencies are about is the ability for normal people to hold deposit accounts that are held directly in the Central Bank although a normal commercial bank would still act as the custodian and you would still access them through your normal bank.

So why go through all of the trouble to do this? I think it's basically an admission that Quantative Easing era is over and that monetary policy in general has run its course and are no longer useful in the age of 0% interest rates while we still face deflation. By having normal people hold central bank accounts, they will be able to implement a new kind of policy that they have wanted the power to do for decades: hybrid fiscal / monetary policy where the monetary policy outcome is deposited directly into the account of a normal person, not a bank.

This is basically the Fed acknowledging that they are getting ready for MMT.

https://www.congress.gov/bill/116th-congress/senate-bill/357...

Edit: I'm getting downvoted on this, maybe because this seems conspiratorial but I don't think I'm really saying anything that speculative here. Look at the title of the article linked to in the attached tweet from the IMF: "A New Bretton Woods Moment". The people involved clearly see this as a time when they need to completely rework the international monetary system (which is what Bretton Woods was in the 40's)

Re: Central Bank Digital Currencies are coming

#116

Post by xalava »

raziel2701 wrote: post #108

What is the difference between a digital currency and the digital money I see in my bank account online? It feels to me like I already transfer money digitally when shopping with a credit card. Later on that twitter thread he shares a poll by the IMF [0] where they ask you how will you be sending money to a family member in 5 years. The possible answers are cash in envelope, money transfer service, digital currency o…

There is a key difference in nature, with some practical consequences.

You don't have money in your bank account, the bank has a debt toward you. When you wire money or pay with a credit card, it triggers a chain of intermediaries to move that debt. It is costly in part because of the counterparty risks. In most countries, an individual however is protected from a bank default up to a certain amount.

Cash is directly minted by the central bank. In a trustless manner, if you exchange goods and services for cash, the settlement is instantaneous. Legally, this cash can be used anywhere in your country.

For everyday use, it might not change habits overnight, but it will have a long term impact on the financial infrastructure.

Re: Central Bank Digital Currencies are coming

#117

Post by anm89 »

A4ET8a8uTh0 wrote: post #45

It may come across as snark, but I happen to believe this quote of Bill Hicks truly captures most of my thoughts on the subject. “Rock stars against drugs – that's what we want, isn't it? Government-approved rock-n-roll? Woo! We're partying now!” The entire reason for crypto is the already ridiculous level of control exerted over various gatekeepers. How do I know? I am part of the system.

The systems being proposed here have absolutely nothing to do with crypto currencies, blockchain, bitcoin, or anything tokenized. They are simply reshuffling of rules about how central bank reserve accounts work.

Re: Central Bank Digital Currencies are coming

#118

Post by xalava »

anm89 wrote: post #115

So I've been tracking this fairly closely via the Banking for All Act and I think a lot of the issues around this are not what they seem to be although I think they signal a very profound shift in the world of monetary politics. For one this has NOTHING to do with crypto currency. This also has NOTHING to do with any kind of technological advancement at all. There is really nothing particularly more digital about the…

The technology side is secondary. However, if it wasn't for cryptocurrencies, we wouldn't be discussing this topic today. Bitcoin has proven that it was possible to build an open financial infrastructure, and has inspired many similar projects.

The hybrid fiscal/monetary policy is an interesting perspective, especially in those times. My understanding of ongoing debates is that there is no clear strategy yet.

Re: Central Bank Digital Currencies are coming

#119

Post by anm89 »

xalava wrote: post #118
anm89 wrote: post #115

So I've been tracking this fairly closely via the Banking for All Act and I think a lot of the issues around this are not what they seem to be although I think they signal a very profound shift in the world of monetary politics. For one this has NOTHING to do with crypto currency. This also has NOTHING to do with any kind of technological advancement at all. There is really nothing particularly more digital about the…

The technology side is secondary. However, if it wasn't for cryptocurrencies, we wouldn't be discussing this topic today. Bitcoin has proven that it was possible to build an open financial infrastructure, and has inspired many similar projects. The hybrid fiscal/monetary policy is an interesting perspective, especially in those times. My understanding of ongoing debates is that there is no clear strategy yet.

I mean read the text of the act that I linked to though. It's only about a page and a half long. And it has absolutely nothing to do with crypto. It's just a technicality around how existing bank accounts work.

Also I really disagree with that premise. This is fundamentally a monetary policy issue and we'd be in the same position whether crypto had come around or not. The only difference is they would have called it something else.

Re: Central Bank Digital Currencies are coming

#120

Post by beaunative »

I_am_tiberius wrote: post #91

Summary of the biggest problem with digital currency managed by central banks: Central banks can use negative interests in order to force people to buy stuff. In the current system people would just withdraw cash in order to avoid negative interest rates if they are too high/low. In the future people will be forced to pay the interests or buy stuff. Governments want to use this mechanism in order to control the econo…

It doesn't have to be approved, central bank is the authority to issue currency, digital or not, it should be thought of as a more economical, convenient replacement for hard cold cash, rather than a replacement for decentralized currencies.
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