These are not the cryptos you're looking for. You don't want ones that trade like currencies, you want ones that trade like stocks.
Central Bank Digital Currencies are coming
31–40 of 149 posts
Re: Central Bank Digital Currencies are coming
#32Are 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…
> What you have in your bank account is not digital cash. It's effectively a note that the bank owes you cash.
Yes.
> as far as I understood without physical money there would be no bank accounts.
I'm not sure why that would be the case. I've never withdrawn a physical dollar from my bank account.
> how could an economy go 100 percent electronic banking, if banking is built on the existence of physical cash? This is the missing link.
I don't think that's the point of CB digital currency. The point of CB's digital currency is to reduce the indirection between policy and business/consumer behavior.
NB: this includes both fiscal and monetary policy. So e.g. provides a mechanism to cut the retail banks out of things like covid relief funds.
Re: Central Bank Digital Currencies are coming
#33Are 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…
Hmmm, wouldn't the CBDC be safer than any other place to put your money? So in a crisis, wouldn't you sell everything and put it in the CBDC including potentially government bonds precisely at the time the government probably needs to borrow cheaply?
That seems like a recipe for disaster to me.
Re: Central Bank Digital Currencies are coming
#34Are 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 think if we want to argue that central banks will soon be pushing for CBDCs to let people have accounts directly with the central bank we need to argue why they at the same time are opposing* narrow banks, which to me seems to be a different technical tool achieving an equivalent goal?
* At least the Fed seems to be: https://www.bloomberg.com/opinion/articles/2019-03-08/the-fe...
Re: Central Bank Digital Currencies are coming
#35The 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 sounds a bit like Canada's LVTS [1]. On the retail side we also briefly played with something called MintChip [2].
[1] https://en.m.wikipedia.org/wiki/Large_Value_Transfer_System
Re: Central Bank Digital Currencies are coming
#36Are 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 see. But then again I am a bit confused by this text in the report on digital euro[0], which was recently posted on HN.
“While the Eurosystem would always retain control over the issuance of a digital euro, supervised private intermediaries would be best placed to provide ancillary, user-facing services and to build new business models on its core back-end functionality. A model whereby access to the digital euro is intermediated by the private sector is therefore preferable.“
That sounds like a bank to me. But I guess it must be so that the relationship between the central bank and intermediary will be different.
I struggle to find the defining features of these CBDCs so that it is more than empty branding. I guess you might sum it up as “bringing the central bank and currency-users closer thanks to modern technologies”?
[0] https://www.ecb.europa.eu/euro/html/digitaleuro-report.en.ht...
Re: Central Bank Digital Currencies are coming
#37Are 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…
Sweden is probably the most advanced in considering an "e" currency and so far the proposals have been of keeping the two-tier system, i.e., you still have an account with a bank.
Re: Central Bank Digital Currencies are coming
#38one 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.
Re: Central Bank Digital Currencies are coming
#39But all of these CB backed digital currencies aren’t like crypto. CBs will presumably be roots of trust and just maintain entries in a normal database.
[deleted]
Re: Central Bank Digital Currencies are coming
#40Buy gold.
If CBDC issuance coincides with banning physical cash, what makes you think that they won't enforce capital controls on alternative currencies?
And there is precedent to this, see Executive Order 6102: https://en.wikipedia.org/wiki/Executive_Order_6102