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Central Bank Digital Currencies are coming

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Re: Central Bank Digital Currencies are coming

#131

Post by anm89 »

hnthrower wrote: post #129
anm89 wrote: post #124

Earlier quoted context omitted.

You are exactly correct. These "digital currencies" are simply new types of bank accounts where retail consumers can hold money at central banks. They are no more digital than any other bank account. They have absolutely nothing to do with crypto either.

Do you have a source for that? If I'm not mistaken it was talked around here in the past about them taking the wallets and keys portion from cryptocurrencies.

The closest thing we have in the US is this proposed legislation: https://www.congress.gov/bill/116th-congress/senate-bill/357...

If you read it I think its pretty clear that whatever they are talking about is totally unrelated to crypto.

But just thinking through it, the properties of crypto are the polar opposite of what a central bank wants out of the monetary system.

The last 80 years since Bretton woods has been the story of the US trying to centralize global markets around the dollar. The last thing they want is something that is either distributed or permissionless.

If you read the wiki for CBDCs it acknowledges this at the end after paying a bunch of lip service to how they were "inspired" by crypto.

https://en.m.wikipedia.org/wiki/Central_bank_digital_currenc...

> In contrast to cryptocurrencies, a central bank digital currency would be centrally controlled (even if it was on a distributed database), and so a blockchain or other distributed ledger would not be required or useful - even as they were the original inspiration for the concept.[24][25

Re: Central Bank Digital Currencies are coming

#133

Post by grey-area »

chrisco255 wrote: post #93
grey-area wrote: post #43

Earlier quoted context omitted.

Bitcoin is not 'electronic cash' as you define it here - it's a shared ledger - there are no coins. The only difference with a current account at your bank is central ledger vs distributed consensus ledger. Also why would a bank require physical cash? Banking is based on savings and loans, debt and credit, not cash. The money in your bank account is not backed by real coins somewhere in a vault.

There's a big difference. The bank is able to create money from thin air when you deposit funds, thanks to fractional reserve banking. Banks typically only need to hold 10% (or less) of total funds deposited. The rest they loan out, which always finds its way back into the banking system, so that effectively, banks are able to loan out about 10x what their depositors have in their accounts. Holding Bitcoin, on the ot…

The amount of bitcoin on the ledger is increasing all the time, it has not reached the limit yet. This is also defined by software rules which can be changed.

Re: Central Bank Digital Currencies are coming

#134

Post by ackbar03 »

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…

This seems to you like a problem, but its actually a major plus for central banks since it gives them a tighter control on economic policy, its actually been touted as one of the major benefits.

Yes it would suck if the value of your money suddenly decreases, but say the central banks wants to subsidize low income groups or small businesses or green tech, they can do that directly digitally without it worrying the money goes to the wrong people / or taken advantage of by the banks, like what we saw with the pandemic

That being said, there are always pros and cons of a centralized entity gaining more control

Re: Central Bank Digital Currencies are coming

#135

Post by Kosirich »

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…

Anyone care to extrapolate or provide reading material on what would be the imminent consequences of X % of money supply being in cripto and out of the reach of banks. Especially in today's economy of low interest rates I wonder what happens in first Y amount of years as X goes from negligible to significant. What are the better works written on impact of increase of crypto usage on economy and society moving from this point.

Re: Central Bank Digital Currencies are coming

#136

Post by GoblinSlayer »

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…

Cryptocurrencies showed that you can keep all money in a single database. I wonder if those CBDC databases have any integrity controls. Can the administrator simply change account balance and nobody will even notice?

Re: Central Bank Digital Currencies are coming

#137

Post by krmmalik »

chrisco255 wrote: post #96
krmmalik wrote: post #80

I loved the discussion with Professor Richard Werner on a podcast lately. He talked about what the European Central Bank is planning and what this means for us as consumers and explains why CBDCs really mean for us. Here's the full interview https://youtu.be/OdYmdKUiQNw

Could you summarize what his thoughts are?

Sure, I'll do my best and hope I'm recalling this correctly.

1. Central banks are regulators, they set the monetary policy that commercial banks must follow

2. Debt is largely created by commercial banks

3. Now the regulator (ECB) wants to be the only creator of debt, thus the regulator is now in direct competition with those it regulates

4. ECB wants to wipe out all the banks and have the pie to itself.

5. Central banks say one thing but their actions often say another

6. CBDCs are not new or revolutionary. Currency is already largely digital and so is debt creation. The only difference here is that the central bank wants to now be the main bank. So the entire public will all bank with one bank. Everyone will have an account at the central bank rather than at a commercial bank of their choice.

7. History tells us this doesn't bode well. This model was run in the Soviet Union and failed terribly. The Central Banks think they are smarter this time but they will fail.

8. Community, non-profit banks are proven to be much better for the economy. Germany had this for a long time which is why it weathered the GFC of 2008, however those community banks are also now being wiped out which means it will struggle to weather this recession successfully.

9. China had a policy change in 1978 which resulted in more community banks and this has contributed significantly to their economic rise.

10. The ECB is not the only central bank with such intentions. Most central banks around the world have the same intentions.

Re: Central Bank Digital Currencies are coming

#138

Post by dalbasal »

anm89 wrote: post #127
dalbasal wrote: post #88

So.... I'm lost. What is a Central Bank Digital Currency? The article he links is pretty corporate-speak. Can anyone translate? What's in the seeming boilerplate now that wasn't there before. Why are they excited about it and how does this mean they can do more stimulus?

These "digital currencies" are simply new types of bank accounts where retail consumers can hold money at central banks. They are no more digital than any other bank account. They have absolutely nothing to do with crypto either.

..are are they a "currency" in any augmented way, or is it just currency as it is now?

Re: Central Bank Digital Currencies are coming

#139

Post by est31 »

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.

A better way of encouraging them to work is to not retract the support as quickly as currently done when there is a job. A lot of things are free (like GEZ for example) when you live on social security, but cost money when you have a job. Thus, you might actually be worse off financially. Even if you had 30% more money, is it really worth that small number to get up every morning at 6 am? A better encouragement would be to phase out government support over a longer span of income.

Re: Central Bank Digital Currencies are coming

#140

Post by est31 »

p1necone wrote: post #128
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.

That's not a U BI then is it? Isn't the point of a UBI to give it to everyone universally regardless of their specific situation?

Yeah it's not UBI, but it still gives rise to a set of people described by "UBI consumer serfs". Who are basically locked in, because even if they got a job, they'd likely be worse off than before, having to pay for more things that were free previously, and having much larger personal costs (having to get up at 6 am every day).
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