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Central Bank Digital Currencies are coming

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Re: Central Bank Digital Currencies are coming

#21

Post by PeterisP »

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…

Well, the current system as you describe is a two-level system with your bank in between; a CBDC allows you to "have an account" directly with the central bank directly and make/receive payments without needing a retail bank intermediary.

It also enables central banks to achieve policy goals that they could not earlier - for example, in the last big crisis all the quantitative easing did not result in as much actual lending to people in the economy as central banks expected; the retail banks between you and the CB had other interests. A CBDC enables a central bank to inject money in the economy directly to people and companies, bypassing the major retail banks.

Re: Central Bank Digital Currencies are coming

#22

Post by claydavisss »

The Fed Digital Dollar will be a purchasing instrument that exists only in an app or website. They will be added and subtracted as the government sees fit. If, for example, the government should want to spike consumer spending, they need only tell you that your account will have a maximum value of $100 as of midnight. Either spend the rest or it will be deleted.

Show up at a political rally for a group that is currently out of favor, your balance is deleted. Break the speed limit and your balance is deleted. Be home by 10pm or your balance is deleted. Pledge 10% of your balance to the poltical party currently in power and you can buy yourself forgiveness on your next potential balance deletion.

Buy gold.

Re: Central Bank Digital Currencies are coming

#23

Post by cuspy »

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 spectacularly or it will be the beginning of an even more rigid caste system.

Very worrying for a system like this to be produced and executed by institutions who have proven time and again that things like human dignity, civil liberties and a chance at upward mobility are no longer relevent.

Re: Central Bank Digital Currencies are coming

#24

Post by ivalm »

xxxxxxxx wrote: post #16

This is the best explanation I have seen : https://youtu.be/uX7VpTqXJhY

That’s very biased. Importantly the fed wallet is interest free, banks should compete with it in the same way they compete with cash under the mattress — by providing interest.

Re: Central Bank Digital Currencies are coming

#26

Post by neural_thing »

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…

California already has laws for creating landed gentry (prop 13 inheritance)

Re: Central Bank Digital Currencies are coming

#28

Post by adament »

CyberDildonics wrote: post #10
globular-toast wrote: post #2

The Bank of England has been using a digital currency for years. When British banks settle up overnight, nothing physical is moving around. I'm pretty sure the same would be true of any developed country.

That is not the same thing. Having addresses with private keys that are the sole permission needed to make transfers is much different from having a bank account that the bank transfers electronically for you.

How? Maybe it is because I live in Denmark where I would claim we are close to a de facto digital currency: a large group(most people under 40) use credit cards or a phone based payment solution for all purchases, use a phone based solution for settling smaller (While I understand the technical differences, I cannot see why from a policy perspective the government or the central bank would be interested in a cryptocurrency like solution? Rather with the current system and Know Your Customer regulation for the banking system, they have tighter control with money transfers since they are all ultimately between bank accounts tied to named entities. I think it is more likely that we abolish physical cash than migrate to a more decentralised currency.

Re: Central Bank Digital Currencies are coming

#29

Post by fh973 »

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 existence of physical cash?

This is the missing link. With those accounts you actually would be able to own electronic cash.

That said I have no idea how this would work in practice. Maybe you would have the payment option to pay with this electronic cash. But why would you pick one over the other?

Re: Central Bank Digital Currencies are coming

#30

Post by riffraff »

PeterisP wrote: post #21
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…

Well, the current system as you describe is a two-level system with your bank in between; a CBDC allows you to "have an account" directly with the central bank directly and make/receive payments without needing a retail bank intermediary. It also enables central banks to achieve policy goals that they could not earlier - for example, in the last big crisis all the quantitative easing did not result in as much actual…

I feel the payment side is pretty relevant here: governments and central banks are starting to realize that as currency dematerilializes the VISA, MasterCard etc of the world are going to drain a significant part of the economy, which they would rather keep, being in the business of, well, managing those currencies.
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