Bank of England to explore a potential Central Bank Digital Currency(bankofengland.co.uk)
bankofengland.co.uk
Bank of England to explore a potential Central Bank Digital Currency
https://www.bankofengland.co.uk/news/2021/april/bank-of-england-statement-on-central-bank-digital-currency
277 comments
>I've not really understood the need for a "digital" pound, the pound is pretty digital already.
The need isn't for the consumer. It's advantageous for the central bankers. With it they can more easily control demurrage/inflation/deflation/confiscation (like the Chinese government plans to do with the e-RMB).
The need isn't for the consumer. It's advantageous for the central bankers. With it they can more easily control demurrage/inflation/deflation/confiscation (like the Chinese government plans to do with the e-RMB).
I would imagine this could lead to interesting changes in how people are taxed.
IE taxes based on savings instead of income.
IE taxes based on savings instead of income.
Digital currency makes negative interest rates possible, which is either exciting or terrifying depending on your view.
Nothing makes negative interest rates impossible right now, in fact it is a reality in several countries. Obviously not something that is available to most borrowers, but government bonds with negative nominal rates do exist, and even US treasury debt has negative real rates (i.e. accounting for inflation) for shorter duration notes/bills. Obviously there is a limit to how negative the rates can become -- eventually the market will find other places to invest -- but that would be equally true with digital currencies.
CBDCs enable negative nominal interest rates on cash deposits, not just on bonds.
What I don't understand is the consequences of that on private banks.
What I don't understand is the consequences of that on private banks.
I fear there is a curious feedback loop on the horizon, where stuff like this accelerates flight into decentralized crypto which then again accelerates further regulatory scrutinity, including bans.
This is possible now, since there's a practical limit on how much business can be conducted in all cash.
Even if every bank account in the country started charging an account fee to cover negative interest rates, people would continue to use banks because they are just so damn convenient.
Even if every bank account in the country started charging an account fee to cover negative interest rates, people would continue to use banks because they are just so damn convenient.
Most US banks on the accounts of most US people (that is, the non-wealthy) likely charge more in fees each month right now than a negative interest rate would affect the balances.
It's really only the wealthy who would be faced with this being any significant amount of money, and those people comprise a tiny minority of bank accounts.
It's really only the wealthy who would be faced with this being any significant amount of money, and those people comprise a tiny minority of bank accounts.
Most banks in Switzerland have negative interest rates on large balances (over 100k or 500k CHF).
Wow. Why?
In a sense, inflation regulation is already taxing based on savings. When the value of the currency falls, everyone's savings is worth a little less (and the more one saves, the more one's relative wealth has diminished).
Though this is intuitive it's not really true in a real sense because it's trivially easy to avoid this "tax". Any asset -- down to a humble CD -- will beat inflation. However, assets increasing in value also increases tax revenue due to capital gains!
1 year CD rates are currently about .65% in the US - well below inflation even if you’re talking Core CPI only.
Just looked and yeah, this is not a good moment for CDs (or high-yield savings accounts). I used to get over 1% from my Ally bank savings account. I suppose you can't beat inflation with CDs or savings accounts right now, though in a higher-interest environment you certainly could.
> in a higher-interest environment you certainly could
Maybe, maybe not - it's possible for interest rates to be high and inflation to be even higher (stagflation).
Maybe, maybe not - it's possible for interest rates to be high and inflation to be even higher (stagflation).
Inflation isn't a tax on savings because you're not supposed to be saving currency. You're supposed to be saving value by investing currency. That's how currency works: it retains value only for as long as necessary. Investments, on the other hand, retain value in the long run. No need to conflate the two. In fact it's a harmful narrative to try and conflate the two.
This is a pretty fundamental misunderstanding of modern economics.
This is a pretty fundamental misunderstanding of modern economics.
Where inflation gets people is typically with wages since wages rise slowly. People with large savings are not sitting on cash. They are invested in things that typically rise right along with inflation.
Wages have kept pace with inflation according to BLS data. Thing about wages though is that they're a social issue and a fiscal policy issue, not a monetary policy issue. Had there been no inflation, wages would have stayed flat in both notional and real dollar terms. The units don't matter, the quantities do. Pointing at monetary policy because the units shifted is not actually addressing the root of the problem.
>Inflation isn't a tax on savings because you're not supposed to be saving currency.
It is a tax on savings whether currency is "supposed" to be saved or not. All retail banks offer savings accounts specifically for this purpose.
It is a tax on savings whether currency is "supposed" to be saved or not. All retail banks offer savings accounts specifically for this purpose.
It's a "tax" on un-invested capital, sure, in the same way a fine is a "tax" on undesirable behavior.
I think tax is the wrong word because a tax implies a kind of tithe on top of desirable behavior. A fine implies that you are being penalized for undesirable behavior. I think the latter is a more apt description.
Your mattress full of hundos is detrimental to the economy and you are being fined for maintaining it.
Savings accounts are not an example of unproductive capital because they collateralize loans. That's why they're not subject to the inflationary haircut. They're not particularly productive hence the low return, which may be below inflation. However, that's an ROI below benchmark, not inflation. i.e. savings accounts are just a bad investment. Bad investments will exist in any market conditions.
Personally I maintain a small cash buffer in a savings account and I pay the (small) delta between inflation and interest rate as a fee for liquidity.
I think tax is the wrong word because a tax implies a kind of tithe on top of desirable behavior. A fine implies that you are being penalized for undesirable behavior. I think the latter is a more apt description.
Your mattress full of hundos is detrimental to the economy and you are being fined for maintaining it.
Savings accounts are not an example of unproductive capital because they collateralize loans. That's why they're not subject to the inflationary haircut. They're not particularly productive hence the low return, which may be below inflation. However, that's an ROI below benchmark, not inflation. i.e. savings accounts are just a bad investment. Bad investments will exist in any market conditions.
Personally I maintain a small cash buffer in a savings account and I pay the (small) delta between inflation and interest rate as a fee for liquidity.
Which is why TIPS were created -- at maturity TIPS pay the greater of the principle adjusted for inflation or the principle without adjustment (so if there is an extended period of deflation you will still get back the amount you put in, and thus benefit from the deflation). TIPS also pay interest, and the coupon is adjusted for inflation as well.
How is it different from what we currently have, assuming that digital pounds/dollars/whatevers are convertible with existing currency? Is existing currency not issued digitally?
When central banks issue cash now are they literally sending billions of dollars to the mint, trucking it off to a bank, and then the bank records it on a digital ledger? Seems wasteful.
When central banks issue cash now are they literally sending billions of dollars to the mint, trucking it off to a bank, and then the bank records it on a digital ledger? Seems wasteful.
> Is existing currency not issued digitally?
It is, but it's restricted. M0 is central bank money [1]. Currently, only financial institutions have it. If the public could open accounts at the BoE, they too could own M0.
CBDCs are a way to give the public M0 without putting the central bank into the retail banking business. That gives central banks powerful new levers. For example, cash limits how negative rates can go. If cash were to become scarce and most money were held as M0, the central bank could enforce negative interest rates by clawing back M0.
Negative rates are feasible today. But were they to go sharply negative, they'd hit bank capital. Having the public directly hold M0 removes that side effect.
[1] https://www.investopedia.com/terms/m/moneysupply.asp
It is, but it's restricted. M0 is central bank money [1]. Currently, only financial institutions have it. If the public could open accounts at the BoE, they too could own M0.
CBDCs are a way to give the public M0 without putting the central bank into the retail banking business. That gives central banks powerful new levers. For example, cash limits how negative rates can go. If cash were to become scarce and most money were held as M0, the central bank could enforce negative interest rates by clawing back M0.
Negative rates are feasible today. But were they to go sharply negative, they'd hit bank capital. Having the public directly hold M0 removes that side effect.
[1] https://www.investopedia.com/terms/m/moneysupply.asp
> For example, cash limits how negative rates can go.
No, it doesn’t. Cash with depreciation or expiration (both preannounced and ad hoc) has been used before. Politics, not technology, limits the use of that tool, and CBDC doesn’t meaningfully change the politics.
No, it doesn’t. Cash with depreciation or expiration (both preannounced and ad hoc) has been used before. Politics, not technology, limits the use of that tool, and CBDC doesn’t meaningfully change the politics.
> Cash with depreciation or expiration (both preannounced and ad hoc) has been used before
Yes, if you changed the cash we're talking about, pounds sterling, it would be different.
> CBDC doesn’t meaningfully change the politics
Remember a few years ago, when IT would talk about getting long-needed projects greenly because they slapped "blockchain" on the proposal?Expiring cash is toxic. CBDC is not. Branding matters.
Yes, if you changed the cash we're talking about, pounds sterling, it would be different.
> CBDC doesn’t meaningfully change the politics
Remember a few years ago, when IT would talk about getting long-needed projects greenly because they slapped "blockchain" on the proposal?Expiring cash is toxic. CBDC is not. Branding matters.
Monetarist concepts have little place in a modern way world.
Bank deposits are insured up to £85k, which means they are as solid and as good as cash.
It’s well known that negative rates only bind on commercial bank deposits - if at all.
Negative rates are just a tax on banks - which they recover by charging more for loans, and paying less for deposits like any other costs.
Bank deposits are insured up to £85k, which means they are as solid and as good as cash.
It’s well known that negative rates only bind on commercial bank deposits - if at all.
Negative rates are just a tax on banks - which they recover by charging more for loans, and paying less for deposits like any other costs.
I'm still not sure I understand. How would a citizen be issued CBDC if not through an account?
Also, wouldn't this widespread use require in-kind withdrawal of cash from circulation to have any real effect?
Also, wouldn't this widespread use require in-kind withdrawal of cash from circulation to have any real effect?
Why is cash withdrawals from circulation be important to CBDC?
Btw I don't think OP argued citizens wouldn't need an account.
Btw I don't think OP argued citizens wouldn't need an account.
> Why is cash withdrawals from circulation be important to CBDC?
>> For example, cash limits how negative rates can go. If cash were to become scarce and most money were held as M0, the central bank could enforce negative interest rates by clawing back M0.
This would only really be effective if CBDC became prevalent enough to actually make a dent in money supply. What proportion of money would have to be CBDC for this to actually have an impact, and would we get there by just pure issuance of CBDC or by taking cash out of circulation and replacing it with CBDC?
> Btw I don't think OP argued citizens wouldn't need an account.
>> CBDCs are a way to give the public M0 without putting the central bank into the retail banking business.
I don't know how you would avoid retail banking unless you were to issue it via a means other than an account.
>> For example, cash limits how negative rates can go. If cash were to become scarce and most money were held as M0, the central bank could enforce negative interest rates by clawing back M0.
This would only really be effective if CBDC became prevalent enough to actually make a dent in money supply. What proportion of money would have to be CBDC for this to actually have an impact, and would we get there by just pure issuance of CBDC or by taking cash out of circulation and replacing it with CBDC?
> Btw I don't think OP argued citizens wouldn't need an account.
>> CBDCs are a way to give the public M0 without putting the central bank into the retail banking business.
I don't know how you would avoid retail banking unless you were to issue it via a means other than an account.
>I don't know how you would avoid retail banking unless you were to issue it via a means other than an account.
There's a lot more that goes into retail banking than just having an account. Of course citizens would need an account, how else will they be tracked :) I think the OP meant that the central bank could give customers an account for the sole purpose of holding their digital "crypto" coins and sending/receiving money with it....without having to do provide all the other services that go with retail banking like loans, credit cards etc.
There's a lot more that goes into retail banking than just having an account. Of course citizens would need an account, how else will they be tracked :) I think the OP meant that the central bank could give customers an account for the sole purpose of holding their digital "crypto" coins and sending/receiving money with it....without having to do provide all the other services that go with retail banking like loans, credit cards etc.
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It is about giving more control to central bankers.
Going fully cashless will make negative rates impossible to avoid. UBI can be more specifically targeted as well.
Generally speaking, the money supply exceeds the total amount of cash in most countries.
Going fully cashless will make negative rates impossible to avoid. UBI can be more specifically targeted as well.
Generally speaking, the money supply exceeds the total amount of cash in most countries.
Yeah really looking forward for UBI being "one click away", and ditching privatized crap like Venmo.
In other words a dystopian nightmare :/
The Chinese government explicitly states the new e-RMB will help them prevent money laundering, tax evasion, and "terrorism financing." The better question is, why is the current system insufficient for addressing these problems?
Hm. I meant to reply to the parent, not you, so that's my bad; but I probably fat-fingered it.
If they are in control of digital currency then they have a ledger of transactions, maybe? and if you have a 1:1 record of every single ledger then it's a bit harder to obfuscate?
Banks & businesses keep ledgers like these, but you have to 1. get your hands on it and 2. in case of multiple sets of books, you need to find the correct one. And then you have to connect all the dots.
Chinese capital and lending controls are very strict but this hasn't stopped Chinese and others to try and move money out of China. China has had repeated issues with things happening beyond regulators' reach until they become too big to hide and then have to be unwound, like excessive use of shadow banks for lending.
If they are in control of digital currency then they have a ledger of transactions, maybe? and if you have a 1:1 record of every single ledger then it's a bit harder to obfuscate?
Banks & businesses keep ledgers like these, but you have to 1. get your hands on it and 2. in case of multiple sets of books, you need to find the correct one. And then you have to connect all the dots.
Chinese capital and lending controls are very strict but this hasn't stopped Chinese and others to try and move money out of China. China has had repeated issues with things happening beyond regulators' reach until they become too big to hide and then have to be unwound, like excessive use of shadow banks for lending.
it would also be pretty beneficial for consumers. Cutting every payment middleman out and having one consistent means of exchange across an entire currency zone would be great.
Settle everything instantly, no charges, no withdrawal fees converting between cash and digital. The cost of running the system are probably minimal compared to what the entire consumer-banking sector collects.
Settle everything instantly, no charges, no withdrawal fees converting between cash and digital. The cost of running the system are probably minimal compared to what the entire consumer-banking sector collects.
e-RMB would let them send out money as stimulus to individuals without needed to count it as money creation publicly. The Chinese will have an unfair advantage with money printing without hitting the value of the currency. The US cash payments to individuals has had a huge positive effect on our own economy and now China can do the same but hidden from view. China could take and send payments to Iran and North Korea outside the traditional payments system. Everything will be hidden from view.
The important distinction is that currently all cashless payment systems are privately run for profit which is effectively a regressive transaction tax.
I understand your point and sympathise, but Handling cash isn't free. yes, for small traders and personal use, cash is effectively free. but as soon as you start to put it into the bank, it incurs a cost.
Depending on where you are, this cost might be hidden from you. (banking in the USA for example is expensive compared to the UK)
However as you point out, those companies that provide PoS terminals take either a monthly fee, or a percentage cut.
Depending on where you are, this cost might be hidden from you. (banking in the USA for example is expensive compared to the UK)
However as you point out, those companies that provide PoS terminals take either a monthly fee, or a percentage cut.
> I understand your point and sympathise, but Handling cash isn't free.
Neither are roads, railways, wastewater treatment, communication lines or electricity. Money is infrastructure, and it makes sense for government to control and subsidize these to secure free and equal access, as well as ensure that developments of them occur in ways that benefit all members of society.
Neither are roads, railways, wastewater treatment, communication lines or electricity. Money is infrastructure, and it makes sense for government to control and subsidize these to secure free and equal access, as well as ensure that developments of them occur in ways that benefit all members of society.
It's also just a control thing. When private enterprises control (and create) money, they will do so based on their own interests. These might not align with the best interests of society at large.
Is it really your experience that the market fails to cater to the interests of the people, and politicians are uniquely capable of it?
Politicians can’t print a dollar without abusing it to promote religion (“In God We Trust”), funding war, or handing it out to get reelected.
Politicians can’t print a dollar without abusing it to promote religion (“In God We Trust”), funding war, or handing it out to get reelected.
Removing "payable to the bearer on demand" seems especially relevant.
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Well, in Keynesian analysis, the private enterprises are supposed to create money. The gov't manages how much they create though reserve requirements.
"As announced on March 15, 2020, the Board reduced reserve requirement ratios to zero percent effective March 26, 2020. "
https://www.federalreserve.gov/monetarypolicy/reservereq.htm
https://www.federalreserve.gov/monetarypolicy/reservereq.htm
So would switching it to a non-profit government body? NPCI (India's quasi-government retail payments infrastructure company) is a non-profit and they're looking to switch to a for-profit.
It worked quite well, I'd say.
It worked quite well, I'd say.
Yes, instead let's have a government payment system with funds expiration date.
Please tell me how I can transfer one pound from me to you using a 20 line Python script? That's what people mean by digital currency.
If you are going to mention the open banking API initiative, then what are the requirements to get access to that? You can't as an individual.
Also, this was the easy case, inter-UK. Now tell me how to transfer using Python and without applying to all kinds of regulators for API access a pound from a UK account to a US/EU/Japan account.
If you are going to mention the open banking API initiative, then what are the requirements to get access to that? You can't as an individual.
Also, this was the easy case, inter-UK. Now tell me how to transfer using Python and without applying to all kinds of regulators for API access a pound from a UK account to a US/EU/Japan account.
> Please tell me how I can transfer one pound from me to you using a 20 line Python script? That's what people mean by digital currency.
It’s been a few years so I don’t remember the details, but I’ve written Python that was about that simple using Teller[0] without any problems. Didn’t need a digital currency or direct access to the Open Banking API, just used normal Pounds Sterling and normal bank accounts.
[0] https://teller.io
It’s been a few years so I don’t remember the details, but I’ve written Python that was about that simple using Teller[0] without any problems. Didn’t need a digital currency or direct access to the Open Banking API, just used normal Pounds Sterling and normal bank accounts.
[0] https://teller.io
A good start, but still suboptimal.
It gives Teller full access to your account from what I read, can you limit it for example to just send money, without them going through your statements?
And it's still only intra-UK.
It gives Teller full access to your account from what I read, can you limit it for example to just send money, without them going through your statements?
And it's still only intra-UK.
> And it's still only intra-UK.
Wise (Formerly TransferWise) does forex.
https://api-docs.transferwise.com/#wise-platform-api
Wise (Formerly TransferWise) does forex.
https://api-docs.transferwise.com/#wise-platform-api
There are countries where the centralized banking system already makes scripted payments possible. For example PrivatBank in Ukraine, by far the largest bank, offers a full featured API for payments, protected by instant one-click authorization from their mobile app.
You can sign up for an N26 account via smartphone app and then use this (unofficial) python library https://github.com/femueller/python-n26
I fully agree with you though, the Open Banking outcome in reality almost looks like a joke. I only found the above as I was searching for a while to find a way to do this that didn't involve building my own screen scrapers to implement.
There are banking offerings in the UK with official APIs however you are looking at £200/month+ in costs.
I fully agree with you though, the Open Banking outcome in reality almost looks like a joke. I only found the above as I was searching for a while to find a way to do this that didn't involve building my own screen scrapers to implement.
There are banking offerings in the UK with official APIs however you are looking at £200/month+ in costs.
What happens if the person you send the money to doesn’t deliver? What happens if someone compromises your account and sends all of your money away fraudulently? These are just two basic things that the current financial system deals with thousands of times per day.
And what about fees? BTC, ETH and many other coins are essentially unusable for smaller transactions. Sending .02 ETH (about $45) from my MEW wallet costs .00292 ETH (about $6.75).
And what about fees? BTC, ETH and many other coins are essentially unusable for smaller transactions. Sending .02 ETH (about $45) from my MEW wallet costs .00292 ETH (about $6.75).
The fact that there are problems to solve doesn't meant that we should just not have the thing.
What happens if I give a street artist 5 pounds to draw my picture and then he flatly refuses?
What happens if someone mugs me on the street and steals 100 pounds from me?
Should we not have cash at all because of these two problems, and others?
What happens if I give a street artist 5 pounds to draw my picture and then he flatly refuses?
What happens if someone mugs me on the street and steals 100 pounds from me?
Should we not have cash at all because of these two problems, and others?
Any government crypto wouldn't be a clone of bitcoin. It wouldn't place any importance on anonymity, untraceability, or immutability (quite the opposite.) There's absolutely no doubt that there would be massive controls over any international payments.
> open banking API initiative
as you've alluded to, its not open to consumers, only financial institutions, with good reason. It gives you lots of access to do all sorts of things.
> how I can transfer one pound from me to you using a 20 line Python script?
Now this isn't a usecase I had thought about. I mean there are APIs that I can use to interface to a specific bank that will allow me to do this. But they are hidden behind layers of bureaucracy.
I think the issue for _consumer_ banking is making sure there is enough screening to make sure its not as easy for scammers and tricksters to get money from you.
as you've alluded to, its not open to consumers, only financial institutions, with good reason. It gives you lots of access to do all sorts of things.
> how I can transfer one pound from me to you using a 20 line Python script?
Now this isn't a usecase I had thought about. I mean there are APIs that I can use to interface to a specific bank that will allow me to do this. But they are hidden behind layers of bureaucracy.
I think the issue for _consumer_ banking is making sure there is enough screening to make sure its not as easy for scammers and tricksters to get money from you.
> as you've alluded to, its not open to consumers, only financial institutions, with good reason. It gives you lots of access to do all sorts of things.
How so? There's no reason a bank account shouldn't be programmable. If the worry is fraud and account hacks, that already happens when the computer is compromised or people get scammed.
How so? There's no reason a bank account shouldn't be programmable. If the worry is fraud and account hacks, that already happens when the computer is compromised or people get scammed.
> There's no reason a bank account shouldn't be programmable
Agreed.
But until we have a better system of plainly showing access levels to one's account its a scammer paradise to allow access via said API.
You and I are educated in the world of API access, so will think twice before clicking "agree" to allowing emoji corp access to my bank account to "verify your identity", but a significant number of people would blindly click allow. Until we have either educated the public, or made an access GUI that stops 99.9% of that kind of use case, its just not worth the hassle.
Agreed.
But until we have a better system of plainly showing access levels to one's account its a scammer paradise to allow access via said API.
You and I are educated in the world of API access, so will think twice before clicking "agree" to allowing emoji corp access to my bank account to "verify your identity", but a significant number of people would blindly click allow. Until we have either educated the public, or made an access GUI that stops 99.9% of that kind of use case, its just not worth the hassle.
> But until we have a better system of plainly showing access levels to one's account its a scammer paradise to allow access via said API.
Nobody says such API would be connected to a person's life holdings. It could be low amounts that are safe to lose in case of a hack.
Of course, you need to educate people to not put all their life savings into those accounts. But the same applies to multiple other services.
Nobody says such API would be connected to a person's life holdings. It could be low amounts that are safe to lose in case of a hack.
Of course, you need to educate people to not put all their life savings into those accounts. But the same applies to multiple other services.
It looks like "Serveless is wrong word!" discussion. (I agree both)
There's no difference between this and the transfers I can do on my bank's website. If anything, having a government crypto account would mean that the government would know who was on both ends of every transaction made through it, and could trivially reverse payments.
Likewise, explain how it works securely in fewer than 20000 words to a non-mathematician. that's what people mean by currency. ;-)
That is kind of like insisting that you explain why paper money is hard to forge in less than 20k works to a non-chemist.
That's a trivial challenge. You can rely on things that people are instinctively familiar with.
Look at the current £10 note. To even start on getting a "close enough" material (the feel of the polymer, the clear windows), you're looking at acquiring specialized print stock they don't exactly stock at the Office Supply Warehouse down the street. Now, how exactly are you going to transfer a design to it? Conventional CMYK inkjet and laser-- if you can get it to stick, are going to be a dotty, indistinct mess. Heat-transfer might bake the colour in, but would probably wreck the material and be blurry and smudgy. Once you've figured that out, try to figure out how you can precision-cut and apply holographic foil and optically-variable panels. Now scale it up to the point where it's economically viable.
If you've used a printer before, you know it's not going to be capable of cranking out a convincing banknote.
For consumer acceptance, it's important that people can directly trust the system. I'm concerned that "here's some papers that if I go to my local university, there might be a few experts in the math department who can parse them and tell me it's trustworthy" won't have quite the same impact as "look at the fine lines making up the portrait of Jane Austin, you know that's not coming out of your HP DeskJet."
Look at the current £10 note. To even start on getting a "close enough" material (the feel of the polymer, the clear windows), you're looking at acquiring specialized print stock they don't exactly stock at the Office Supply Warehouse down the street. Now, how exactly are you going to transfer a design to it? Conventional CMYK inkjet and laser-- if you can get it to stick, are going to be a dotty, indistinct mess. Heat-transfer might bake the colour in, but would probably wreck the material and be blurry and smudgy. Once you've figured that out, try to figure out how you can precision-cut and apply holographic foil and optically-variable panels. Now scale it up to the point where it's economically viable.
If you've used a printer before, you know it's not going to be capable of cranking out a convincing banknote.
For consumer acceptance, it's important that people can directly trust the system. I'm concerned that "here's some papers that if I go to my local university, there might be a few experts in the math department who can parse them and tell me it's trustworthy" won't have quite the same impact as "look at the fine lines making up the portrait of Jane Austin, you know that's not coming out of your HP DeskJet."
Starling in the UK already supports that (for individual, mere-mortal customers) if you are sending money to an existing payee. There is at least a couple of fintech startups that offer sending money (or even full-blown all-digital bank accounts) using a HTTP API call if you're a business.
"That's what people mean by digital currency."
So often not though. Money without oversight will instantly attract the most nefarious users that governments don't like, so it's unlikely anything a government would propose is going to very easily allow things to happen without some kind of regulatory control.
It's hard to fathom exactly what the point would be, because even the benefit of reducing VISA style transaction taxes from the current 2.5% to about 0.1% (which is where it should be) would incur the wrath of the institutions that make money from that and sponsor centre-right politicians in the UK.
It's too early to tell, it could just be a political football for now, something to talk about, get attention, distract us etc..
So often not though. Money without oversight will instantly attract the most nefarious users that governments don't like, so it's unlikely anything a government would propose is going to very easily allow things to happen without some kind of regulatory control.
It's hard to fathom exactly what the point would be, because even the benefit of reducing VISA style transaction taxes from the current 2.5% to about 0.1% (which is where it should be) would incur the wrath of the institutions that make money from that and sponsor centre-right politicians in the UK.
It's too early to tell, it could just be a political football for now, something to talk about, get attention, distract us etc..
Why would the money have no oversight? It would have complete oversight.
Or better, 0.000001 pounds for streaming a song from my privately hosted streaming service.
That's a tiny amount of money. Or are you going to listen to a million songs for £1? It's still reasonable to batch a few hundred listens for a small transaction every month.
The parent comment was about enabling micropayments, not the proper price for a song. Forest for the trees...
I guess I'm more wondering what possible value such a tiny micropayment could be. There's no conceivable business that would charge in such small increments. Even an average ad impression is more than a penny.
In fact, things are heading the other way, with "micro"-transactions in mainstream games sometimes exceeding the price of the game itself.
In fact, things are heading the other way, with "micro"-transactions in mainstream games sometimes exceeding the price of the game itself.
Spotify for example pays between $0.003 and $0.005 per stream [0]
In the music business u don't make money on each song, you only make oney from hit songs.
That song streamed 10 million times can earn you $50k. And it could be more if spotify wasn't taking a bite out of it.
[0]: https://www.businessinsider.com/how-much-does-spotify-pay-pe...
In the music business u don't make money on each song, you only make oney from hit songs.
That song streamed 10 million times can earn you $50k. And it could be more if spotify wasn't taking a bite out of it.
[0]: https://www.businessinsider.com/how-much-does-spotify-pay-pe...
Actually, the value of such a tiny micropayment is negative -- it would cost more just to process such a small payment than the amount being paid.
Today, with our archaic system. That's why we need digital currencies.
It costs multiple dollars to make a BTC transaction... Even in a perfect world we are not going to be able to make it free if we still expect the infrastructure to be independently run.
That’s very unlikely to be what any central bank entities mean by digital currency.
Open Banking is not available to individuals by design. Can you imagine the fraud levels if it was?
Open Banking is not available to individuals by design. Can you imagine the fraud levels if it was?
Someone explained this to me last year with an example, and it 'clicked'. The idea is to let the government control the 'velocity of money'. For example, the US is giving out stimulus checks for COVID - the clear goal is to keep business afloat and people spending, but what if they just put the money into savings or crypto? The government did not achieve their goal.
To achieve their goal, they program the money with "must be spent on consumer goods and/or rent in the next 6 months." Then they put a "smart contract" on the money and say "can only be spent if you are drug free and looked for a job in the last 6 months."
It's scary and I am against it, but above is the upside, from a certain perspective.
To achieve their goal, they program the money with "must be spent on consumer goods and/or rent in the next 6 months." Then they put a "smart contract" on the money and say "can only be spent if you are drug free and looked for a job in the last 6 months."
It's scary and I am against it, but above is the upside, from a certain perspective.
Japan tried this in the 90s with expiring vouchers, results were subpar.
The bailwick of Jersey sent citizens a prepaid card with £100 expiring in 6 monhts which was also disabled for ATM withdrawls during 2020. Again moderate results.
Money is a unit of account, if you mess with it people adjust quickly, there is no free lunch.
It's not the same as giving Wellbutrin+Ritalin to somebody who is depressed.
The bailwick of Jersey sent citizens a prepaid card with £100 expiring in 6 monhts which was also disabled for ATM withdrawls during 2020. Again moderate results.
Money is a unit of account, if you mess with it people adjust quickly, there is no free lunch.
It's not the same as giving Wellbutrin+Ritalin to somebody who is depressed.
Then they must have be doing something wrong?
Obviously people would not be foregoing free money if it was easy to get.
You are arguing that people would not spend "free" 100 usd on their rent if the money/voucher was directed towards rent.
"How bad things must be if the government resorts to giving us free money with an expiration date to force us to spend? I'll spend my 100$ card before it expires but I'll save extra 200$ of my salary compared to before. I have to brace for the worst that it's yet to come, it's going to be really bad before it gets better, especially given that the Government is resorting to giving us free money "
The more you use extreme measures to force people to do what they don't want, the more they'd refuse to do so.
When people are scared and paralyzed by fear, messing with the unit of account won't calm their worries, if anything given how out of the ordinary it is, it could be argued that it makes things worse.
Money is external, people pick the scheme apart rather quickly and you end up worse than before because now you look desperate to force them to do what you want
The more you use extreme measures to force people to do what they don't want, the more they'd refuse to do so.
When people are scared and paralyzed by fear, messing with the unit of account won't calm their worries, if anything given how out of the ordinary it is, it could be argued that it makes things worse.
Money is external, people pick the scheme apart rather quickly and you end up worse than before because now you look desperate to force them to do what you want
Right. Push this insanity too much and people will start bartering using gold/silver/crypto and such. Then the gov is forced to ban the use of assets and things get complicated.
Whether this is good or bad on the long run is debate-able, but it would shake things up globally.
Whether this is good or bad on the long run is debate-able, but it would shake things up globally.
I think the key to what ObserverNeutral is saying has a strong point - "People will try to sell their fake, expiring "crypto-dollars" for real money, instead of following the rules.
Even if they can't see the "crypto-dollar" for less "real dollars", they will just go through some medium of exchange. I.e. buy toilet paper for crypto dollars, and sell it at a discount.
Great point. I didn't consider it offhand.
Even if they can't see the "crypto-dollar" for less "real dollars", they will just go through some medium of exchange. I.e. buy toilet paper for crypto dollars, and sell it at a discount.
Great point. I didn't consider it offhand.
Taiwan tried a variant of it during Covid too-- they issued a bunch of vouchers that you could buy for NT$200/500/1000, and stores agreed to take them at three times face value, until the end of 2020.
I tried to get one for my banknote collection, but it got lost in the post. :/
I tried to get one for my banknote collection, but it got lost in the post. :/
what were the results ?
The reason for a CBDC are new features. Money that can be programmed to only be used in certain ways, with certain groups, or at certain times, e.g. expiring money. It’s more nudging power for our unelected technocrat dear leaders. Imagine the possibilities!
The only thing this has in common with Bitcoin is "digital". The rest is pretty much opposite of what Bitcoin was supposed to be. (And I say "was supposed to be" because everyone has a different idea about what Bitcoin is today. But that's not related to this discussion here.)
I don't think anyone could credibly claim that Bitcoin is what it set out to be. The original paper calls it "electronic cash" and in its introduction describes private people using it for small transactions, replacing trust with cryptography. I would hope that a CBDC shares that original goal of replacing cash, though to what extent cryptography will be involved I'm not sure. (I do doubt BoE are just going to fork the Bitcoin code and spin up their own blockchain.)
So, less functional money? More complicated gift card?
If the reason the government doesn't want to spend money on it's people is because they fear the money will be spent on the wrong things (outside the scope of what they are trying to fix) then making money less functional is actually more functional.
[deleted]
Just think of it as money-as-a-service
I think it's more like making negative interest rates or a wealth tax unavoidable...
/TinFoilHat
/TinFoilHat
Money is infrastructure, and the digitization of money has resulted in the privatization of that infrastructure. I don't think that was ever part of the plan, really, as far as the government goes.
its a good point but more interesting to consider the history of money as a private enterprise, aka fractional reserve banking and independence of the fed, -> private financiers of governments going back through the ages. Modern gov fiat has been the best form of money yet but is still backed by private 'lending' . Whats SUPER interesting is how the proof of work -> proof of stake models continue to provide a monetary system in which the money holders control the system, it seems for now an unavoidable component -> good incentives for value allocators
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A good example why current currencies are not digital, like Bitcoin, is the settlement process of a public trade stock which takes 2 days because of the current financial system.
A digital currency would make possible to settle a trade stock in minutes or even seconds.
A digital currency would remove a lot of transactions costs associated with buying/selling stocks.
A digital currency would make possible to settle a trade stock in minutes or even seconds.
A digital currency would remove a lot of transactions costs associated with buying/selling stocks.
The stock trade settlement time has little to do with the financial system, but more with how stock trading is organised.
There are quite a few steps before actual stocks can change hands. For instance the seller could have sold without actually owning the stocks, it might be he even can't deliver them, in which case the clearing will have to take care of that, etc. All these steps could have been automated long ago if the will was there, the reason they haven't is not because of the currency used but because of traditional common practice and legacy reasons.
There are quite a few steps before actual stocks can change hands. For instance the seller could have sold without actually owning the stocks, it might be he even can't deliver them, in which case the clearing will have to take care of that, etc. All these steps could have been automated long ago if the will was there, the reason they haven't is not because of the currency used but because of traditional common practice and legacy reasons.
Actually, no. Stock trading is settled over a period of two days only because of how the system is currently organized; it is technically possible to settle trades at the end of the day, or even in real time, and there are exchanges in the world that settle trades rapidly. The reason the US exchanges have not changed is inertia, and settlement periods have actually decreased just in my lifetime.
One real reason why digital currencies are not widely deployed is crime. Already there is a growing problem of ransomware demanding Bitcoin payments; a "true" digital currency that was as convenient as Bitcoin and allowed offline (peer-to-peer) payments (which Bitcoin does not and cannot support) would enable "perfect crimes." This was a concern raised in the 90s when digital cash was being proposed:
https://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.46...
This was one of the concerns that prevented banks from adopting e-cash (as the term is understood by cryptographers), though I have been told by people who worked on this that law enforcement agencies were satisfied that they could still "follow the money" since the anonymity property was narrowly defined (banks could not link deposits to withdrawals, but banks would still know who had made a particular deposit, merchants would still be able to identify customers, etc.).
One real reason why digital currencies are not widely deployed is crime. Already there is a growing problem of ransomware demanding Bitcoin payments; a "true" digital currency that was as convenient as Bitcoin and allowed offline (peer-to-peer) payments (which Bitcoin does not and cannot support) would enable "perfect crimes." This was a concern raised in the 90s when digital cash was being proposed:
https://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.46...
This was one of the concerns that prevented banks from adopting e-cash (as the term is understood by cryptographers), though I have been told by people who worked on this that law enforcement agencies were satisfied that they could still "follow the money" since the anonymity property was narrowly defined (banks could not link deposits to withdrawals, but banks would still know who had made a particular deposit, merchants would still be able to identify customers, etc.).
> the pound is pretty digital already.
What you didn't mention is that it's also already pretty digital at point of sale as well; Contactless payment, i.e. "card taps" are very common.
What you didn't mention is that it's also already pretty digital at point of sale as well; Contactless payment, i.e. "card taps" are very common.
> A government isn't ever going to allow a normal citizen to have a anonymous payments system so I don't see them allowing a purely private and anonymous currency (ala-monero)
Actually, the UK got pretty close to it in the 1990s
https://en.wikipedia.org/wiki/Mondex
Actually, the UK got pretty close to it in the 1990s
https://en.wikipedia.org/wiki/Mondex
I don't know much about UK politics, but the government over there seems to adore surveillance and has no qualms with recording as much information as they possibly can. I simply don't see them accepting the idea of an anonymous payments system.
They also have an economy built upon money laundering, tax avoidance, and other related activities. I've heard many people say that the real reason behind Brexit was to avoid new EU regulations being imposed on British banks.
uhm... physical cash is an anonymous payment system?
Which is why it's under attack. Here in Australia the government considered (though later dropped) a bill criminalising cash transactions of over AUD$10,000 between businesses and an individual.
Covid was also used in government PR to try and sell the idea of a cashless society.
Covid was also used in government PR to try and sell the idea of a cashless society.
It looks that way until you try to put a lot of it in a bank or turn it into "big people money" aka capital. Roughly at that point governments would like to have some idea of who you are.
Yes, it is digital, but it's minted by private banks, not the government. It's been a huge problem. Private banks cannot be trusted with our money supply as they have repeatedly shown.
Currency is not digital.
What they mean by "digital currency" is a for instance a purely digital bank note than you can hold and transfer to someone else (like for instance a crypto token). Clearly that's not how things work now.
Edit: See my further comment below as it looks like people don't quite understand what "digital currency" is.
What they mean by "digital currency" is a for instance a purely digital bank note than you can hold and transfer to someone else (like for instance a crypto token). Clearly that's not how things work now.
Edit: See my further comment below as it looks like people don't quite understand what "digital currency" is.
That's literally how the BoE works.
when you do a bank transfer, do you think they physical cash?
When the BoE does quantitative easing, they don't actually print money[1], they just "transfer" money to banks who then do "things" with it. Its literally just numbers in a DB.
[1] handling physical cash is expensive, slow and difficult. Not only is the price of movement relatively static regardless of the value, you have to keep on paying to store the stuff. The Federal reserve do things differently I think, because are not quite as all in one as the BoE.
when you do a bank transfer, do you think they physical cash?
When the BoE does quantitative easing, they don't actually print money[1], they just "transfer" money to banks who then do "things" with it. Its literally just numbers in a DB.
[1] handling physical cash is expensive, slow and difficult. Not only is the price of movement relatively static regardless of the value, you have to keep on paying to store the stuff. The Federal reserve do things differently I think, because are not quite as all in one as the BoE.
> That's literally how the BoE works
Not, it's not.
It seems you and others are confused here and do not understand what is meant by "digital currency".
Digital currencies, like what is discussed and e.g. the "digital yuan" in China, it to create real digital bank notes / coins. Not expert by I think similar to a crypto token.
It means I can hold a digital bank note and pay you by transferring it to you.
This is very different to the current system in which I instruct my bank to do something and to balance with the recipient's bank.
Depending how this is implemented it can be anonymous like physical bank notes, or it can be tracked and plenty of other things also become possible. It also does not require me to interact with my bank.
Not, it's not.
It seems you and others are confused here and do not understand what is meant by "digital currency".
Digital currencies, like what is discussed and e.g. the "digital yuan" in China, it to create real digital bank notes / coins. Not expert by I think similar to a crypto token.
It means I can hold a digital bank note and pay you by transferring it to you.
This is very different to the current system in which I instruct my bank to do something and to balance with the recipient's bank.
Depending how this is implemented it can be anonymous like physical bank notes, or it can be tracked and plenty of other things also become possible. It also does not require me to interact with my bank.
You say, "Real, digital bank notes" but really, they are just numbers that you can write down if you want. That number is worthless unless you do the digital transfer (ie telling bank/service to do something). Realistically, it is no different. I can do all of this stuff with a bank, and person to person transfers are easy where I'm at. You are still interacting with a company or government to move your money around - and doing the same if you are receiving money. It doesn't really matter that it isn't your bank, even if you hate your bank. You have to do this even if you pay cash for a piece of used furniture: Most employers do not pay in cash.
The only real benefit to this system is that it would probably be run by a government agency and as such, would theoretically make it available to everyone. This would reduce the cost of being unbanked in the US and probably improve lives. Honestly, though, you could just make basic banking available for everyone so they can get paid, pay bills online, and shop easily - it'd likely prove to be more cost effective.
The only real benefit to this system is that it would probably be run by a government agency and as such, would theoretically make it available to everyone. This would reduce the cost of being unbanked in the US and probably improve lives. Honestly, though, you could just make basic banking available for everyone so they can get paid, pay bills online, and shop easily - it'd likely prove to be more cost effective.
"Digital currency" is a wide term. At one extreme it can be a token that can be used anonymously and without the need for a bank in the same way coins and bank notes are today: As long as people are satisfied that they are genuine they are happy to accept them as payment.
The point being is that what is referred to as "digital currency" is not what we have now (otherwise the BoE and others would not be studying feasibility and costs/benefits). In that sense currency is not digital at the moment. Bank ledgers and transfer instructions are.
The point being is that what is referred to as "digital currency" is not what we have now (otherwise the BoE and others would not be studying feasibility and costs/benefits). In that sense currency is not digital at the moment. Bank ledgers and transfer instructions are.
> It seems you and others are confused here and do not understand what is meant by "digital currency"
You started of staying "currency is not digital", a broad statement about which I don't think there's any confusion, it's just flat-out incorrect. If it's not digital then what is it then, analogue?
Now you're talking about a particular form of digital token, which OK, maybe currency isn't that, and the usefulness of that isn't given. Saying "currency isn't digital because it's not this token" is like saying ".png files aren't digital because they're not .mp3s". It's still numbers in computers. You know, digital.
You started of staying "currency is not digital", a broad statement about which I don't think there's any confusion, it's just flat-out incorrect. If it's not digital then what is it then, analogue?
Now you're talking about a particular form of digital token, which OK, maybe currency isn't that, and the usefulness of that isn't given. Saying "currency isn't digital because it's not this token" is like saying ".png files aren't digital because they're not .mp3s". It's still numbers in computers. You know, digital.
Guys, please try to read about "digital currency" before writing snarky replies and downvoting.
Currency is currently not digital in the sense meant here. Otherwise the BoE and other central banks would not discuss the possibility of issuing digital currency. It's rather the banks' ledgers and transfer instructions that are digital.
In my previous comment I have only tried to explain what CBDC is. Perhaps I did not do a good job if so please feel free to provide a better explanation that would benefit everyone.
> "currency isn't digital because it's not this token
I have not written that, so I think you do not understand the topic. Here for reference to start with:
https://en.wikipedia.org/wiki/Central_bank_digital_currency
Currency is currently not digital in the sense meant here. Otherwise the BoE and other central banks would not discuss the possibility of issuing digital currency. It's rather the banks' ledgers and transfer instructions that are digital.
In my previous comment I have only tried to explain what CBDC is. Perhaps I did not do a good job if so please feel free to provide a better explanation that would benefit everyone.
> "currency isn't digital because it's not this token
I have not written that, so I think you do not understand the topic. Here for reference to start with:
https://en.wikipedia.org/wiki/Central_bank_digital_currency
> Currency is currently not digital in the sense meant here. Otherwise the BoE and other central banks would not discuss the possibility of issuing digital currency.
The alternative is of course that it's all meaningless hype. Just because the government does something doesn't necessarily prove it makes sense.
The alternative is of course that it's all meaningless hype. Just because the government does something doesn't necessarily prove it makes sense.
From a government point of view, a "Taskforce to coordinate the exploration of a potential ..." (quoting from the article) often makes sense, and doesn't necessarily result in anything much resembling action. See also "kicking it into the long grass".
Sorry I had confused your statement to mean shipping physical currency about.
your clarifications were helpful
your clarifications were helpful
Your statement was "Currency is not digital." - digital, full stop. Which is a nonsense. The word "digital" is well-defined.
It seems that you're now saying that "BoE Currency is not digital currency." with a specific meaning of "digital currency" separate from the definition of "digital" or "currency".
It seems that you're now saying that "BoE Currency is not digital currency." with a specific meaning of "digital currency" separate from the definition of "digital" or "currency".
So, it'll do a thing I can already do with money?
Can I have that? I'm not a briton (perhaps I'm even from a country you're at war with.)
This is why digital replacements for cash hasn't (and likely won't) succeed.
This is why digital replacements for cash hasn't (and likely won't) succeed.
A normal citizen is never gonna build a government that allows for anonymous payment systems.
To often people speak of their government as completely abstract separated entity they can only submit to. But actually, they elect them and the government even follow them in their craziest follies, like, say, leaving the EU in the UK.
To often people speak of their government as completely abstract separated entity they can only submit to. But actually, they elect them and the government even follow them in their craziest follies, like, say, leaving the EU in the UK.
The influence you get with democracy is very limited.
I don't feel represented by any of the parties that have a chance to get into power.
Democracy is literally the majority ruling over the minority - the problem being that even that majority can pick between entities they agree with on some issues and not others.
Decentralisation of power is the only way to get control back to people and out of an elected oligarchy.
I don't feel represented by any of the parties that have a chance to get into power.
Democracy is literally the majority ruling over the minority - the problem being that even that majority can pick between entities they agree with on some issues and not others.
Decentralisation of power is the only way to get control back to people and out of an elected oligarchy.
We don't elect the Bank of England. And while it's government as the US likes to use the word, it's not government as the UK likes to.
> To often people speak of their government as completely abstract separated entity they can only submit to.
it is a compromise. I don't want to live in anarchy (sorry, a libertarian world) because like extreme communism it has inherent flaws. Thus I submit to being ruled by the UK government, and actively vote in elections. However as its a compromise, no present party with a chance of winning power reflects my views, thus compromise.
However to your main point. Anonymous easy payments are a vector for corruption, crime and general bad stuff. Sure there are good usecases for it, but mostly it'll be used to avoid tax.
it is a compromise. I don't want to live in anarchy (sorry, a libertarian world) because like extreme communism it has inherent flaws. Thus I submit to being ruled by the UK government, and actively vote in elections. However as its a compromise, no present party with a chance of winning power reflects my views, thus compromise.
However to your main point. Anonymous easy payments are a vector for corruption, crime and general bad stuff. Sure there are good usecases for it, but mostly it'll be used to avoid tax.
I share your feelings on government but, after reading The Machinery of Freedom, I believe anarchy is worth a shot.
I wonder if you would reconsider anarchy if there was a private system of entities providing government-like services and compete with each other.
http://daviddfriedman.com/The_Machinery_of_Freedom_.pdf
I wonder if you would reconsider anarchy if there was a private system of entities providing government-like services and compete with each other.
http://daviddfriedman.com/The_Machinery_of_Freedom_.pdf
This will be good for anyone interested in using modern cryptocurrencies, whilst also allowing governments to control access to accounts and adjust the money supply if necessary.
It's a win-win for everyone.
Also the energy required to secure the ledger will be dramatically reduced. Proof of work can be replaced by physical security, which is more energy efficient.
Anyone wanting to rewrite the ledger would need more power than the government has in protecting it.
It's a win-win for everyone.
Also the energy required to secure the ledger will be dramatically reduced. Proof of work can be replaced by physical security, which is more energy efficient.
Anyone wanting to rewrite the ledger would need more power than the government has in protecting it.
> Proof of work can be replaced by physical security, which is more energy efficient.
I'm not sure you understand how banking works. The BoE already has a ledger, its just private[1] for a number of reason (the banks accounts are published, but not in real time, and not by individual account). All banks have ledgers, and sometimes they even marry up.
[1]well kind of.
I'm not sure you understand how banking works. The BoE already has a ledger, its just private[1] for a number of reason (the banks accounts are published, but not in real time, and not by individual account). All banks have ledgers, and sometimes they even marry up.
[1]well kind of.
What would happen if you walked in to their server room and tried to update their database to reverse a payment?
Simply, "It doesn't work like that". Very similar to how you can't just "hack bitcoin and change your wallet value". At best you can use your web inspector to add zeroes to your balance.
Transactions in ledger-based accounting require a source and target account. In double-entry, all transaction legs have to sum to zero. "$10 on Paul; -$10 on Alice."
Your "current balance" may be cached, but it's never used. Most financial systems (which I suspect extends to banks, but I could be wrong) will enforce recalculation of at least the tip of the account's ledger whenever a transaction comes out of it. You don't just add/substract from a cached number.
Transactions in ledger-based accounting require a source and target account. In double-entry, all transaction legs have to sum to zero. "$10 on Paul; -$10 on Alice."
Your "current balance" may be cached, but it's never used. Most financial systems (which I suspect extends to banks, but I could be wrong) will enforce recalculation of at least the tip of the account's ledger whenever a transaction comes out of it. You don't just add/substract from a cached number.
You would be politely asked why you were in a restricted area, and asked to leave.
Currency is based on trust. Trust that the ledger is correct, auditable and matches up.
but to address your question, its possible to unilaterally reverse a payment, but as you'll then have to tell the clearing house to reverse the transaction, you'll need to get authorization from thirdparty, which is tricky. Moving money around inside a bank though is probably much easier.
However you're far better off just running a limited company and offering loans, that's a far easier way commit fraud.
Currency is based on trust. Trust that the ledger is correct, auditable and matches up.
but to address your question, its possible to unilaterally reverse a payment, but as you'll then have to tell the clearing house to reverse the transaction, you'll need to get authorization from thirdparty, which is tricky. Moving money around inside a bank though is probably much easier.
However you're far better off just running a limited company and offering loans, that's a far easier way commit fraud.
How do you know that I won't steal funds from your account?
Do you simply trust that I won't, and that your bank trusts me not to do so?
I suppose the question is, what's stopping me? Trust or security?
Do you simply trust that I won't, and that your bank trusts me not to do so?
I suppose the question is, what's stopping me? Trust or security?
In truth? I don't think your competent enough to get that far.
but more deeply its both trust security, and legal liability.
First you need to gain access to the system in the first place. Then you need to have unfettered access and be undetected. Considering this has been the number one ledger attack since the beginning of time (which is why tally sticks were a thing, and double entry book keeping) There are lots of systems in place to stop, detect or alert. Not only that you have the statement generating system which sends out physical copies of the account monthly.
Second we would need clearing houses to not notice that there is a mismatch in funds.
third when you try to extract that cash, we'd need the money laundering alarms to not go off. Which, if you've tried to buy a house in the UK, you know is not at all trivial.
You have to realise that the banking system is reliant on a bunch of very bored, highly motivated, fresh out of uni graduates to tally, move and generally be the grease that moves capital about. They will have tried all sorts of tricks to cheat, scam & salami slice money. There is a huge amount of effort going on to stop, detect and deflect fraud. Mainly because the banks are liable for it.
So for standard bank accounts, the chance of someone getting access to a server and changing the values of my account and not being detected are pretty limited. Not impossible, but small.
And thats the key. If the bank cocks up, the law is very much on my side as a consumer. the bank will be compelled to reverse the fraud. If they don't they get fined and or loose their license (although in practice, I don't think thats likely.)
With zero trust, if someone cocks up a digital contract and someone extracts the entire escrow value, game over. no recourse, other than to try and take the perp to court.
but more deeply its both trust security, and legal liability.
First you need to gain access to the system in the first place. Then you need to have unfettered access and be undetected. Considering this has been the number one ledger attack since the beginning of time (which is why tally sticks were a thing, and double entry book keeping) There are lots of systems in place to stop, detect or alert. Not only that you have the statement generating system which sends out physical copies of the account monthly.
Second we would need clearing houses to not notice that there is a mismatch in funds.
third when you try to extract that cash, we'd need the money laundering alarms to not go off. Which, if you've tried to buy a house in the UK, you know is not at all trivial.
You have to realise that the banking system is reliant on a bunch of very bored, highly motivated, fresh out of uni graduates to tally, move and generally be the grease that moves capital about. They will have tried all sorts of tricks to cheat, scam & salami slice money. There is a huge amount of effort going on to stop, detect and deflect fraud. Mainly because the banks are liable for it.
So for standard bank accounts, the chance of someone getting access to a server and changing the values of my account and not being detected are pretty limited. Not impossible, but small.
And thats the key. If the bank cocks up, the law is very much on my side as a consumer. the bank will be compelled to reverse the fraud. If they don't they get fined and or loose their license (although in practice, I don't think thats likely.)
With zero trust, if someone cocks up a digital contract and someone extracts the entire escrow value, game over. no recourse, other than to try and take the perp to court.
[deleted]
> whilst also allowing governments to control access to accounts and adjust the money supply if necessary. It's a win-win for everyone.
In what way is more government surveillance and control over accounts a win for the average citizen? The rich will always find a way like they do with taxes, and it's the average person that suffers every time.
In what way is more government surveillance and control over accounts a win for the average citizen? The rich will always find a way like they do with taxes, and it's the average person that suffers every time.
I don't think we want to live in a society where individuals have complete control over their money, which is was cryptocurrencies like Bitcoin enable.
Absolutely.
Switching into their own digital currency (or watever technology) government picks doesn't automatically make them and their fiscal policy more trustworthy among businesses, investors or citizens.
They can't hide abusive tax policies, irresponsible spending and desire to control their citizens wealth and financial lives behind their "digital" version of fiat.
Switching into their own digital currency (or watever technology) government picks doesn't automatically make them and their fiscal policy more trustworthy among businesses, investors or citizens.
They can't hide abusive tax policies, irresponsible spending and desire to control their citizens wealth and financial lives behind their "digital" version of fiat.
They should make it work on the 'old money' system of penny, shilling and pound, with twelve pence to a shilling and twenty shillings to the pound, then use the abbreviation 'd' for pence, and then throw in farthings (quarter penny) and half-crowns (two shillings and six pence) because if there's one thing I've learnt about finance, its that the more confusing things are, the easier it is to make a profit.
Don't forget the guinea: equal to a pound and a shilling, or 21 shillings, for the purposes of bidding for a racehorse.
Also the British Sovereign with a nominal value of a pound an an actual value of about £320 judging by ebay https://www.ebay.co.uk/sch/i.html?_from=R40&_trksid=p2334524...
The funniest thing I've seen on HN in quite a while. You could even monetise it by marketing to those people who are fans of pre-decimal currency for bizarre political reasons.
To be fair, a base-60 system has some value over a base-100 system.
That being said, a pound is so worthless today that the difference between 1/60th of a pound and 1/100th is meaningless; it would just be a rounding error in most calculations.
I suspect that all fractions of a £ will go the way of the shilling in the next 30 years.
That being said, a pound is so worthless today that the difference between 1/60th of a pound and 1/100th is meaningless; it would just be a rounding error in most calculations.
I suspect that all fractions of a £ will go the way of the shilling in the next 30 years.
Still higher than the dollar? We lost a chunk against the Euro but not as much as I was expecting. The only thing the £ has really devalued against is housing.
While in general quite confusing, I cannot help but notice, that they used to use better divisible numbers like 12, to go to the next bigger unit.
I also read that Babylonians or whoever it was, used a system with base 60, even better divisible.
I wonder how it would affect our daily lives, if we still had such better divisible numbers in use with money today. For example 60 cent make a euro or dollar or whatever. Of course then it might not be called "cent" any longer.
In essence, perhaps not all ideas of such an old system were bad in principle.
I also read that Babylonians or whoever it was, used a system with base 60, even better divisible.
I wonder how it would affect our daily lives, if we still had such better divisible numbers in use with money today. For example 60 cent make a euro or dollar or whatever. Of course then it might not be called "cent" any longer.
In essence, perhaps not all ideas of such an old system were bad in principle.
The problem is not a micro-optimization such as using base 10 or base 12. The problem is that we can't all agree on a common measurement system and the biggest economy in the world stubbornly keeps using an archaic and sub-optimal system that it's actively pushing onto the rest of us.
For example, instead of having screen details in sqcm (and aspect ratios), we have inches (and maaaaybe aspect rations mentioned somewhere). This is being pushed <<everywhere>> around the world because of freaking device screens.
It's like a comment about I saw about nature: if we see a rodent eating a bug, that's a bit gross but it's ok (the rodent being a mammal and therefore closer to us, so "superior"), but if we saw a bug eating a rodent, we're appalled. Right now the US imperial measurement system seems like that bug trying to eat the rodent (metric/decimal system).
For example, instead of having screen details in sqcm (and aspect ratios), we have inches (and maaaaybe aspect rations mentioned somewhere). This is being pushed <<everywhere>> around the world because of freaking device screens.
It's like a comment about I saw about nature: if we see a rodent eating a bug, that's a bit gross but it's ok (the rodent being a mammal and therefore closer to us, so "superior"), but if we saw a bug eating a rodent, we're appalled. Right now the US imperial measurement system seems like that bug trying to eat the rodent (metric/decimal system).
Historically, metric was the thing being pushed.
The "pushing" isn't the problem.
The nature (good/bad) of the thing being pushed is. The imperial system is objectively inferior since the metric system has been created.
The nature (good/bad) of the thing being pushed is. The imperial system is objectively inferior since the metric system has been created.
My favorite theory explaining the emergence of base- 12 and 60 is counting on your fingers: count up to the 12 phalanges on one hand (using your thumb), then start over and keep track of dozens with the 5 fingers on the other hand.
My parents grew up with the "old money", and my father in particular always said that it was easier to work with because everything divided by 2,3 or 4 easily. His opinion was always that the new money was introduced to make computerisation easier. In other words, the benefit wasn't for humans (who prefer working in 12's), but for computers.
That does not make sense to me, since computers "native" numbers are not binary and the layer on top would not care one bit if it converts the binary representation to whatever base. Not to mention that the wide-spread use of the decimal system among humans happened long before computers where even dreamed of. So those things point to the decimal system adoption having been made for humans and not for computers.
Countries other than the UK had done that step (for currency) centuries before Britain too.
Here is some background: "How Britain converted to decimal currency" -- https://www.bbc.com/news/business-12346083
Also,
> the benefit wasn't for humans (who prefer working in 12's)
I'm not sure what people you know, I don't know anyone who would prefer base 12. That seems like a very bold claim to me - I think I would like to see some evidence for it.
Countries other than the UK had done that step (for currency) centuries before Britain too.
Here is some background: "How Britain converted to decimal currency" -- https://www.bbc.com/news/business-12346083
Also,
> the benefit wasn't for humans (who prefer working in 12's)
I'm not sure what people you know, I don't know anyone who would prefer base 12. That seems like a very bold claim to me - I think I would like to see some evidence for it.
It's popular for time. See you in an an hour rather than in 0.041666 days.
That's a bad example, because you use exactly one hour.
If you divide the day in 10, let's call it decile, you would say see you in a decile instead of 2.43 hours.
As a side effect, 2.43h is actually 2h and less than 30 minutes and not 2h and 43 minutes (unintuitive), while 0.41 decile would probably be 41 centile, so conversion would be easier.
If you divide the day in 10, let's call it decile, you would say see you in a decile instead of 2.43 hours.
As a side effect, 2.43h is actually 2h and less than 30 minutes and not 2h and 43 minutes (unintuitive), while 0.41 decile would probably be 41 centile, so conversion would be easier.
I have no evidence for any of it except the anecdotal mumblings of an old man ;) Though a lot of different societies came up with 12-based systems, so there might be something to it.
It is clear that illiterate people could work in "old money" fine. I suspect this is like the darts players who can do the mental arithmetic involved in a darts match fine, but would consider themselves "bad at maths". It's a learning cliff, but like any learning cliff, it no longer matters once you've climbed it.
It is clear that illiterate people could work in "old money" fine. I suspect this is like the darts players who can do the mental arithmetic involved in a darts match fine, but would consider themselves "bad at maths". It's a learning cliff, but like any learning cliff, it no longer matters once you've climbed it.
Humans have 10 fingers and 10 toes. We almost certainly prefer working with 10s for that reason, all things being equal.
Many ancient human cultures had base 12 and base 60 number systems because there are 12 digit segments that can be indexed by pointing your thumb — 3 segments/digit x 4 fingers
> Of course then it might not be called "cent" any longer.
Would probably be called a sextant, which would raise a few eyebrows in British politics if history is to go by.
Would probably be called a sextant, which would raise a few eyebrows in British politics if history is to go by.
I suspect some of there more out there "brexiteers" would like that - I have seen calls for returning to imperial units FFS!
I'd take it over the Euro.
Can I use this to buy a hogshead of ale?
A bunch of comments in this thread claim that the pound is already digital, because you can send and receive pounds using a mobile app or online banking. But these transactions simply transfer obligations (debts) denominated in pounds between parties. They are not operations on actual pounds (i.e. on the central bank currency).
You can trade 'pork bellies futures' quickly, and using nothing but a computer. But no one claims pork bellies are digital. When people trade, they're effectively trading IOUs, and not the actual bellies.
A Central Bank Digital Currency would allow individuals to hold and transfer 'real' pounds (M0). Currently, only banks and selected other financial institutions can open accounts at the Bank of England.
If you think you (an individual) can currently hold digital pounds, just because you have a bank account, consider this question. If you have 200k GBP in your bank account, and the bank goes bust, will you still be able to withdraw 200k GBP?
You can trade 'pork bellies futures' quickly, and using nothing but a computer. But no one claims pork bellies are digital. When people trade, they're effectively trading IOUs, and not the actual bellies.
A Central Bank Digital Currency would allow individuals to hold and transfer 'real' pounds (M0). Currently, only banks and selected other financial institutions can open accounts at the Bank of England.
If you think you (an individual) can currently hold digital pounds, just because you have a bank account, consider this question. If you have 200k GBP in your bank account, and the bank goes bust, will you still be able to withdraw 200k GBP?
While deposits up to some amount are guaranteed FSCS, in reality the government simply can't stand by while there's a run on a consumer bank. Northern Rock was nationalized when this happened in 2008. Even with the FSCS, customers don't want to risk their money being inaccessible while they wait on their claim to be processed.
Now imagine a banking system where banks can go bust without savers (with just cash on their accounts) having to worry. The aftermath of the global financial crisis would have been quite a bit different: Fewer bankers getting a bailout and more shareholders of big banks actually being held accountable for the unduly risk they took. The fact that a lot of people's money is debt on the balance sheet of a bank creates dangerous co-dependencies between let's say the investment banking and the classical private banking. There are many ways this can be addressed but CBDC are definitely one of them.
Wasn't that the case with Lehman's? No savers affected yet still precipitated a huge crisis. Too big to fail.
Banks can always go bust without savers being affected. You have a well documented resolution procedure for banks, which involves the shareholders taking a bath and HM Treasury recapitalising the bank using the Contingencies Fund.
It is for the Bank of England to take the loss, not the depositors, since the Bank of England is regulating the banks.
It is for the Bank of England to take the loss, not the depositors, since the Bank of England is regulating the banks.
"They are not operations on actual pounds (i.e. on the central bank currency)."
They are - because the deposits are insured 100% up to £85,000 by the deposit protection scheme.
You can show mathematically that an insured system and a in-specie system are exactly equivalent.
If I have more that £85,000 then I put it in National Savings for absolute security.
That covers over 99% of "digital cash" situations in the UK.
Neither of those things have anything to do with the central bank, because central bank money in the UK is also a derivative. The operational assets of the Bank of England are a claim on the National Loans Fund with recourse to the Consolidated Fund and ultimately parliamentary authority. Which is where Sterling truly originates.
They are - because the deposits are insured 100% up to £85,000 by the deposit protection scheme.
You can show mathematically that an insured system and a in-specie system are exactly equivalent.
If I have more that £85,000 then I put it in National Savings for absolute security.
That covers over 99% of "digital cash" situations in the UK.
Neither of those things have anything to do with the central bank, because central bank money in the UK is also a derivative. The operational assets of the Bank of England are a claim on the National Loans Fund with recourse to the Consolidated Fund and ultimately parliamentary authority. Which is where Sterling truly originates.
You have a point here, but sadly most of the current state of art in CBDC research avoids storing accounts at Central Banks due to the obvious risk of disintermediating banking system.
The points of others thread stays: what is the point of CBDC for individuals if the supply is not limited and not stored at Central banks...
The points of others thread stays: what is the point of CBDC for individuals if the supply is not limited and not stored at Central banks...
I'm not up to date with the state of the art, but the March 2020 paper from the Bank of England seemed clear that balances would be held on a ledger at the Bank of England. Whether the balances on this ledger would be assigned to specific beneficiary owners, or only to intermediaries (like retail banks) wasn't clear. But, in either case, only the central bank could issue/mint new balances.
It's just bank accounts at the Bank of England - something the BoE got out of in 2008.
Anything else drops down a money laundering black hole.
Anything else drops down a money laundering black hole.
Are British bank accounts not FDIC insured?
> Are British bank accounts not FDIC insured?
No. They are protected by the FSCS [1].
[1] https://en.wikipedia.org/wiki/Financial_Services_Compensatio...
No. They are protected by the FSCS [1].
[1] https://en.wikipedia.org/wiki/Financial_Services_Compensatio...
Even if UK banks were covered by FDIC (which covers only US banks), the limit is $250k (less the 200k GBP I mentioned in my comment).
The UK equivalent is capped at 170k GBP per account-holder: https://www.moneysavingexpert.com/savings/safe-savings/
The UK equivalent is capped at 170k GBP per account-holder: https://www.moneysavingexpert.com/savings/safe-savings/
Does the FDIC cover any other country's banks than the US?
Usually "foreign" banks can mean multiple things. Imagine you have a bank out of the UK with a subsidiary based in the US (one example could be Barclays in the UK and then Barclays US).
The US based subsidiary could potentially be FDIC insured, but wouldn't cover deposits denominated in the originating foreign bank's deposit, which is logical IMO.
The FDIC has a page about this but it's pretty useless.
https://www.fdic.gov/regulations/laws/part/
The US based subsidiary could potentially be FDIC insured, but wouldn't cover deposits denominated in the originating foreign bank's deposit, which is logical IMO.
The FDIC has a page about this but it's pretty useless.
https://www.fdic.gov/regulations/laws/part/
There's lots of speculation here on what the Bank of England means by a central bank digital currency (CBDC) - people may be interested in the more concrete indications of what the Bank is / has been considering in a discussion paper which they published in March 2020: https://www.bankofengland.co.uk/-/media/boe/files/paper/2020...
The chapter on Technology Design states "Although CBDC is often associated with Distributed Ledger Technology (DLT — see Box 5), we do not presume CBDC must be built using DLT. Most existing payment systems are run on centralised technology stacks, and there is no reason CBDC could not also be built this way. However, DLT includes a number of potentially highly useful innovations, which can potentially be adopted independently of each other, allowing us to use the specific features of DLT which are most relevant and appropriate, without using DLT in its entirety."
The paper also discusses the risk-free nature of the currency (compared to deposits held in a commercial bank where consumers in principle face credit risk if the bank defaults), resilience, and innovation. And it notes the interesting related questions of whether the CBDC would be interest-bearing, and to what extent consumers switching from commercial bank deposits to the CBDC would impact the commercial banking model (using deposits to fund lending).
The chapter on Technology Design states "Although CBDC is often associated with Distributed Ledger Technology (DLT — see Box 5), we do not presume CBDC must be built using DLT. Most existing payment systems are run on centralised technology stacks, and there is no reason CBDC could not also be built this way. However, DLT includes a number of potentially highly useful innovations, which can potentially be adopted independently of each other, allowing us to use the specific features of DLT which are most relevant and appropriate, without using DLT in its entirety."
The paper also discusses the risk-free nature of the currency (compared to deposits held in a commercial bank where consumers in principle face credit risk if the bank defaults), resilience, and innovation. And it notes the interesting related questions of whether the CBDC would be interest-bearing, and to what extent consumers switching from commercial bank deposits to the CBDC would impact the commercial banking model (using deposits to fund lending).
This is a key point. CBDCs have no intrinsic overlap with blockchain or crypto currencies. You could use a blockchain as part or all of the strategy for storing the data of your currency but you could do it without using these concepts at all. The more likely scenario here is that blockchains will not be used here.
People should not confuse CBDCs with crypto. They are unrelated concepts.
People should not confuse CBDCs with crypto. They are unrelated concepts.
Amen.
One does need a decentralized ledger for CBDC, high performance databases are quite acceptable, as there is no problem of lack of trust in a permissined model (no systematic bad actor). If you listen to Moser (and Chaum) video, he even states somewhere the unnecessity of DLTs for retail CBDCs.
There are still some benefits but not worth to bet against the blockchain trilemma in these early stages.
One does need a decentralized ledger for CBDC, high performance databases are quite acceptable, as there is no problem of lack of trust in a permissined model (no systematic bad actor). If you listen to Moser (and Chaum) video, he even states somewhere the unnecessity of DLTs for retail CBDCs.
There are still some benefits but not worth to bet against the blockchain trilemma in these early stages.
What I believe the BOE is exploring is for each citizen to have an account with the BOE and the potential for the types of money that can be used in this parallel banking system.
If we think of the financial system as plumbing, the central bank has direct pipes to banks but rarely to citizens. This is not usually a problem except when you need to do a big emergency stimulus push not having direct pipes to individuals means stimulus takes a long time to reach individuals (if it does at all). Even countries like the USA and UK had a challenge rolling out stimulus, so this is a mechanism to bypass traditional banking system in a crisis.
Thats just the banking aspect, the interesting stuff is what you can do with the type of money issued. For example you can build inflation into the currency, to encourage the user to spend it. Or it can be tied to carbon credits as a way to encourage the purchase of environmentally friendly products. I am not saying this is what is going to happen, only that a digital currency directly issued by a central bank has the potential to be used in ways that is not readily possible right now.
If we think of the financial system as plumbing, the central bank has direct pipes to banks but rarely to citizens. This is not usually a problem except when you need to do a big emergency stimulus push not having direct pipes to individuals means stimulus takes a long time to reach individuals (if it does at all). Even countries like the USA and UK had a challenge rolling out stimulus, so this is a mechanism to bypass traditional banking system in a crisis.
Thats just the banking aspect, the interesting stuff is what you can do with the type of money issued. For example you can build inflation into the currency, to encourage the user to spend it. Or it can be tied to carbon credits as a way to encourage the purchase of environmentally friendly products. I am not saying this is what is going to happen, only that a digital currency directly issued by a central bank has the potential to be used in ways that is not readily possible right now.
The government doesn’t need everyone to have an account at the central bank in order to deposit money directly into their account.
QE doesn’t stimulate the economy because bonds and reserves are functionally identical as far as bank capital requirements are concerned and reducing interest rate payments is deflationary.
QE doesn’t stimulate the economy because bonds and reserves are functionally identical as far as bank capital requirements are concerned and reducing interest rate payments is deflationary.
>The government doesn’t need everyone to have an account at the central bank in order to deposit money directly into their account.
It does make it a lot easier. The US, for example, was issuing stimulus cheques because there was no way to directly transfer funds into bank accounts. The UK had the same problem, so they pushed their stimulus through employers. In both cases there was no direct pipe from the central bank to the intended recipient which is what I think is most of what BoE is trying to achieve.
QE was the equivalent of using a waterfall to put out a candle. If you squint hard enough and get drunk on supply-side wonk-juice you could convince yourself it worked.
It does make it a lot easier. The US, for example, was issuing stimulus cheques because there was no way to directly transfer funds into bank accounts. The UK had the same problem, so they pushed their stimulus through employers. In both cases there was no direct pipe from the central bank to the intended recipient which is what I think is most of what BoE is trying to achieve.
QE was the equivalent of using a waterfall to put out a candle. If you squint hard enough and get drunk on supply-side wonk-juice you could convince yourself it worked.
"The UK had the same problem"
The UK doesn't have the same problem. Our payments are entirely electronic, and there is a direct pipe from HM Treasury to every person with a Sterling bank account. The choice to run the furlough scheme via PAYE was political, not technological.
Our electronic transfer system is sufficiently sophisticated that the government can operate on a commercial bank account and have the money automatically transferred from a Contra account at the Bank of England.
The UK has some of the finest electronic banking facilities in the world.
The UK doesn't have the same problem. Our payments are entirely electronic, and there is a direct pipe from HM Treasury to every person with a Sterling bank account. The choice to run the furlough scheme via PAYE was political, not technological.
Our electronic transfer system is sufficiently sophisticated that the government can operate on a commercial bank account and have the money automatically transferred from a Contra account at the Bank of England.
The UK has some of the finest electronic banking facilities in the world.
Hey are you THAT Neil Wilson, as in THE Neil Wilson? Or just A Neil Wilson?
You may think that. I couldn't possibly comment.
“The US, for example, was issuing stimulus cheques because there was no way to directly transfer funds into bank accounts”
Do you have a source for this? It seems crazy to me because in Australia almost everyone just got stimulus payments deposited the same as any other government transfer payment or tax return and we don’t all have accounts at the RBA
Do you have a source for this? It seems crazy to me because in Australia almost everyone just got stimulus payments deposited the same as any other government transfer payment or tax return and we don’t all have accounts at the RBA
> QE doesn’t stimulate the economy because bonds and reserves are functionally identical as far as bank capital requirements are concerned and reducing interest rate payments is deflationary.
Actually reserves are slightly better!
Actually reserves are slightly better!
That idea is usually associated with postal banking - letting citizens open a bank account at the Post Office that provides basic services, no interest, but no fees either.
The UK simply mandated that large banks must offer fee free basic bank accounts to all and make ATM withdrawals free from any other bank's ATMs.
(Most bank accounts in UK have no fees if you never go overdrawn anyway, but previously banks could refuse to open one if they considered you a credit risk.)
(Most bank accounts in UK have no fees if you never go overdrawn anyway, but previously banks could refuse to open one if they considered you a credit risk.)
More info here [1], and a background discussion paper her [2].
[1] https://www.bankofengland.co.uk/research/digital-currencies
[2] https://www.bankofengland.co.uk/-/media/boe/files/paper/2020...
[1] https://www.bankofengland.co.uk/research/digital-currencies
[2] https://www.bankofengland.co.uk/-/media/boe/files/paper/2020...
A taskforce is being created. That's all folks.
But don't forget: one of the things it's going to do is look for a ... use case!
We prefer the term "Do Group"
Indeed, you well sum up the article
Design by committee, what could possibly go wrong.
In fairness Bitcoin wasn't designed by committee and it's up there with CFCs in how much of a detriment it is to the environment
Bitcoin uses energy. Energy is a detriment to the environment, but it doesn't have to be.
The problem isn't the energy usage, the problem is that we're bad at generating energy without killing the planet.
The problem isn't the energy usage, the problem is that we're bad at generating energy without killing the planet.
Governments cant just trust it to a single 'stable genious' and call it a day
Probably lends itself GNU Taylor which works with central authority.
https://taler.net/en/index.html
https://taler.net/en/index.html
Why is this not more widely deployed?
It's been around a while, is compliant with a bunch of regulations, is from perhaps the world's best software "stable", and doesn't require idiotic amounts of energy to compute.
Should we not not all run our own Taler servers?
It's been around a while, is compliant with a bunch of regulations, is from perhaps the world's best software "stable", and doesn't require idiotic amounts of energy to compute.
Should we not not all run our own Taler servers?
Super interesting talk on this at https://www.youtube.com/watch?v=EM7NB1_NtC4
Central banks are going fintech. Now the global currency wars can begin
Well - they began in about 1914 when the UK got out of the gold standard. Very good essay by Adam Tooze about the recent shots fired.
https://foreignpolicy.com/2021/04/01/janet-yellen-mario-drag...
https://foreignpolicy.com/2021/04/01/janet-yellen-mario-drag...
I think the value here isn't for consumers. It's having a central ledger that all of the main financial institutions use. No need to a move a % of your treasury reserves into the central bank each night. As the treasury department of Barclays for example, the central bank of england can see your liquidity buffers in real time, intraday.
Not sure if direct electronic payments without intermediaries are all that useful. How are disputes going to be dealt with?
Same as with cash payments or bank transfers today.
What? The bank is the intermediary, right?
For cash payments, is there good dispute handling? It's terrible, right? And most people who are robbed of their cash don't get it back, right?
For cash payments, is there good dispute handling? It's terrible, right? And most people who are robbed of their cash don't get it back, right?
might makes right
We've seen this kind of technology in search of a problem before in the UK and specifically with cryptocurrency:
http://www.open.ac.uk/research/news/blockchain-startup-calle...
This was sold as: our bitcoin/govcoin solution will keep people from being evicted from their homes because banks take 3 days to pay. Which if you spent 15 minutes looking into you would find out it's a total nonsense.
http://www.open.ac.uk/research/news/blockchain-startup-calle...
This was sold as: our bitcoin/govcoin solution will keep people from being evicted from their homes because banks take 3 days to pay. Which if you spent 15 minutes looking into you would find out it's a total nonsense.
Government run digital money is the second best thing after decentralised digital money. Since the latter has not panned out as originally hoped, I support this second best approach.
I'm curious what is the situation in the UK with regards to the universalness of banking services, especially electronic ones. .
In the US we have a large portion of the population that is "unbanked" for a varaity of reasons and have to rely on sketchy and scam financial services like those prepaid debit and credit cards and "check cashing places".
In the US we have a large portion of the population that is "unbanked" for a varaity of reasons and have to rely on sketchy and scam financial services like those prepaid debit and credit cards and "check cashing places".
Approximately any adult in the UK can open a fee-free bank account:
https://www.moneyadviceservice.org.uk/en/articles/basic-bank...
https://www.moneyadviceservice.org.uk/en/articles/basic-bank...
Central bank currencies, at least in the U.K. where our payment system is near instant anyway, is little more than a retail bank account at the Bank of England.
A game the Bank of England got out of back in 2008. (People who worked at the BOE used to have the perk of a BOE bank account with the fabled 10-xx-xx sort code)
Funny how these things go in cycles.
A game the Bank of England got out of back in 2008. (People who worked at the BOE used to have the perk of a BOE bank account with the fabled 10-xx-xx sort code)
Funny how these things go in cycles.
Who asked for this and where is the proof-of-ask?
Also how can we make money from this?
Also how can we make money from this?
If this provides a solution for anonymised digital cash payments such that something like paypal or a bank transfer isn't necessary then i'm all for it.
It's a central bank currecy issued by a nation state. It's unlikely that anonymity will be a feature.
As more governments research and implement digital currencies doesn’t it hurt the general use case for crypto?
This is great... easier rails into hard money (crypto).
Just no.
Hard money is not desirable. Whatever comes out of this "the country's money supply should be determined by some cryptobros" is not going to be the result.
Hard money is not desirable. Whatever comes out of this "the country's money supply should be determined by some cryptobros" is not going to be the result.
I get the "anti-crypto-bro" sentiments, but Ive trusted the FOSS/linux communities for long enough to have open and auditable tech and clear decision making, it might not be perfect but it is a lot more transparent than my government.
I'd pick the crypto-communities and thousands of people gaming them to design better mechanisms for the everyday people to use, than a few politicians and the banks that are bribing them.
I'd pick the crypto-communities and thousands of people gaming them to design better mechanisms for the everyday people to use, than a few politicians and the banks that are bribing them.
I think you might be over estimating the overlap between the FOSS/Linux community and the crytobro community - at least as it exists in 2021
I think HN repeatedly underestimates the overlap of these communities. FOSS ideology is critical in pretty much all crypto/defi projects.I can probably pick any dev in the space and they'll most likely be running linux.
HN refuses to change its collective position it settled on a decade ago. It seems people here got stuck on some abstract projections of "crypto-capitalism-cruelty" and refuse to admit there might be something interesting going on.
Where did the "move fast and break things" people, the "disrupt the institutions" people, and the hackers go? crypto.
Or should we only be working on sass startups to reformat pdfs. is that what we're allowed to work on? everything else is a moral sin?
Utterly Bizarre.
HN refuses to change its collective position it settled on a decade ago. It seems people here got stuck on some abstract projections of "crypto-capitalism-cruelty" and refuse to admit there might be something interesting going on.
Where did the "move fast and break things" people, the "disrupt the institutions" people, and the hackers go? crypto.
Or should we only be working on sass startups to reformat pdfs. is that what we're allowed to work on? everything else is a moral sin?
Utterly Bizarre.
The problem with that is that there doesn’t seem to be anything interesting going on, beyond speculative hyper-capitalism. All the problems crypto was going to solve were illusory, or crypto was not a useful tool in solving them. Instead we’ve had years and years of hype and bubbles and solution-looking-for-a-problem but nothing much of any practical value.
“Move fast and break things” now has a bad rap too in much of society - it turns out not everyone wants their things broken, and some of that stuff was useful. The world is not as in-love with the output of Silicon Valley startups as it used to be, having seen some of them play out.
“Move fast and break things” now has a bad rap too in much of society - it turns out not everyone wants their things broken, and some of that stuff was useful. The world is not as in-love with the output of Silicon Valley startups as it used to be, having seen some of them play out.
Monero is very close to the original cryptocurrency dream. Private, anonymous, fast transactions, low fees, mineable by CPUs, can be and actually is used as a currency.
Preach!
Agreed. The money supply should be flexible to help alleviate the effects of inevitable financial crashes.
This of course devalues the savings of the average person when this happens, but it's the only way to recover from mistakes like the mortgage bubble.
This of course devalues the savings of the average person when this happens, but it's the only way to recover from mistakes like the mortgage bubble.
Inflation is almost never caused by government spending. It’s caused by regulatory policy that allows, for example, bubbles in real estate or by external shocks like oil and so on. The whole “fiscal policy will debase the currency” thing is blown way out of proportion. I should also point out that there are much better financial instruments than cash to hold long term savings and they’re being made ever more accessible.
The benefit of a government supplied digital currency is a payment system that isn’t run for profit.
The benefit of a government supplied digital currency is a payment system that isn’t run for profit.
> Agreed. The money supply should be flexible to help alleviate the effects of inevitable financial crashes.
In reality, you either do it in secret...or it makes the crash even worse because people would be even more risk averse because they see the government using these non conventional tool...hence "it must be pretty bad, better save some more"
QE is the quintessential example of this. The only American who benefitted from QE was Bernanke, so he got to be hailed as a hero and now everybody genuflects to him and uses his "playbook".
In reality, you either do it in secret...or it makes the crash even worse because people would be even more risk averse because they see the government using these non conventional tool...hence "it must be pretty bad, better save some more"
QE is the quintessential example of this. The only American who benefitted from QE was Bernanke, so he got to be hailed as a hero and now everybody genuflects to him and uses his "playbook".
> QE is the quintessential example of this. The only American who benefitted from QE was Bernanke, so he got to be hailed as a hero and now everybody genuflects to him and uses his "playbook".
The US came out of the 2008 Great Recession much better than the Eurozone due to its ability to borrow cheaply as a result of QE. The Eurozone was hamstrung by the ECB's inability to act similarly and the 2012 agreement to allow the ECB to purchase "unlimited" amounts of bonds saved the currency.
The US came out of the 2008 Great Recession much better than the Eurozone due to its ability to borrow cheaply as a result of QE. The Eurozone was hamstrung by the ECB's inability to act similarly and the 2012 agreement to allow the ECB to purchase "unlimited" amounts of bonds saved the currency.
US went down more steeply and emerged faster than the EU, not because of QE, or all the fairy tales told by the Fed.
The US as a country is more dynamic, younger and more risk prone than the Eurozone . That's about it. QE had nothing to do with anything.
In turn the dynamism and risk proneness of the US is nothing compared to places like India, Pakistan or Nigeria.
The EU is still a bit more risk prone than Japan but it's really close
Japan is the most risk averse country on Earth and are stagnating since the 90s , no matter how much QE they do or how much they tinker with their unit of account. Economic growth requires entrepreneurial risk taking and consumer risk taking. Down there they don't even risk going to the bar and approach girls, they hardly have sex anymore. With this social landscape the entrepreneurial risk taking which is necessary to start a business and consumer risk taking necessary to max out a credit card for purchases...that's a pure mirage and tinkering with the unit of account or the plumbing won't save them, or anybody for that matter. Just serves as a way for Treasury secretary and the BoJ chair to keep his job and justify his social status because he is "doing something to fix the economy"
Back to the GFC, the US went down more steeply and emerged faster the same way a dude in his 20s can do too much drugs, be wasted and out for a couple of hours and then go to work as nothing happened in the morning.
The destiny of megasocial groups made up of 400M people are not decided by the few elected officials, it's the elected officials who find themselves in those spots because they enact the policies which are popular among the 400M people.
The US as a country is more dynamic, younger and more risk prone than the Eurozone . That's about it. QE had nothing to do with anything.
In turn the dynamism and risk proneness of the US is nothing compared to places like India, Pakistan or Nigeria.
The EU is still a bit more risk prone than Japan but it's really close
Japan is the most risk averse country on Earth and are stagnating since the 90s , no matter how much QE they do or how much they tinker with their unit of account. Economic growth requires entrepreneurial risk taking and consumer risk taking. Down there they don't even risk going to the bar and approach girls, they hardly have sex anymore. With this social landscape the entrepreneurial risk taking which is necessary to start a business and consumer risk taking necessary to max out a credit card for purchases...that's a pure mirage and tinkering with the unit of account or the plumbing won't save them, or anybody for that matter. Just serves as a way for Treasury secretary and the BoJ chair to keep his job and justify his social status because he is "doing something to fix the economy"
Back to the GFC, the US went down more steeply and emerged faster the same way a dude in his 20s can do too much drugs, be wasted and out for a couple of hours and then go to work as nothing happened in the morning.
The destiny of megasocial groups made up of 400M people are not decided by the few elected officials, it's the elected officials who find themselves in those spots because they enact the policies which are popular among the 400M people.
The Eurozone crisis that followed the Great Recession resulted from the structure of the Euro, which had removed the option for countries in the Eurozone to monetize their debt, creating a default risk, forcing them to inflict disastrous austerity on their economies and lengthening the recession.
While US states saw similar affects on their budgets (since they are not allowed to run deficits) this was offset by large federal deficits which kept the economy running. Borrowing costs were kept low by the Fed's QE.
EU central spending is only about 1% of GDP, much less smaller than the US Federal Government spending of 20% in normal years and does not borrow in its own right. The ECB's eventual agreement to stand behind Eurozone governments and pledging to buy their debt was crucial to resolving the crisis.
While US states saw similar affects on their budgets (since they are not allowed to run deficits) this was offset by large federal deficits which kept the economy running. Borrowing costs were kept low by the Fed's QE.
EU central spending is only about 1% of GDP, much less smaller than the US Federal Government spending of 20% in normal years and does not borrow in its own right. The ECB's eventual agreement to stand behind Eurozone governments and pledging to buy their debt was crucial to resolving the crisis.
Money is a unit of account.
You like to see human agency in the resolution of the crisis.
In my opinion that's not the case, all the interventions and the tinkering of the unit of accounts and messing with the plumbing of the money markets has a neutral effect.
Wallace Neutrality and Miller-Modigliani prove this mathematically.
You also have to take into account the extreme worry if not outright panic that people have when they see the Fed resort to these sort of hail mary interventions.
"If they need to do this...how bad must it be?"
This was a recurrent theme during the GFC, so there's empirical evidence to claim it's not even neutral but actually counterproductive
You like to see human agency in the resolution of the crisis.
In my opinion that's not the case, all the interventions and the tinkering of the unit of accounts and messing with the plumbing of the money markets has a neutral effect.
Wallace Neutrality and Miller-Modigliani prove this mathematically.
You also have to take into account the extreme worry if not outright panic that people have when they see the Fed resort to these sort of hail mary interventions.
"If they need to do this...how bad must it be?"
This was a recurrent theme during the GFC, so there's empirical evidence to claim it's not even neutral but actually counterproductive
Money is just a unit of account. But without enough of it the system gums up and people are left unemployed. We moved on from the gold standard for good reason.
there is no proof of this
also let the dollar be infinitly divisible up to the 10th decimal and then let's talk about the system clogging up
also let the dollar be infinitly divisible up to the 10th decimal and then let's talk about the system clogging up
Better than a system in which there are no tools to deal with such problems, and in which monetary supply causes a constraint on the economy, rewarding those who simply hold the currency rather than the productive or investors.
This just shows that blockchain is a good technology.
But that bitcoin is just an implementation waiting to become obsolete.
But that bitcoin is just an implementation waiting to become obsolete.
I've been hearing this for 10 years straight.
Thus far the only successful examples of Blockchain technology have been based on digital currencies and Bitcoin has done nothing but continue it's success.
On the other hand, there is not one example of "Blockchain technology" put to work on anything that needed it.
Thus far the only successful examples of Blockchain technology have been based on digital currencies and Bitcoin has done nothing but continue it's success.
On the other hand, there is not one example of "Blockchain technology" put to work on anything that needed it.
We use blockchain at work ( not by me).
It's not because you haven't seen it in public, that it isn't used.
Also: https://www.fnality.org/home which the bank of england ( mentioned in the article) is a member of to settle between banks.
I also wouldn't see bitcoin as a success. No one that i know of uses it in daily life ( except some being hyped by it and HODL'ing it)
It's not because you haven't seen it in public, that it isn't used.
Also: https://www.fnality.org/home which the bank of england ( mentioned in the article) is a member of to settle between banks.
I also wouldn't see bitcoin as a success. No one that i know of uses it in daily life ( except some being hyped by it and HODL'ing it)
"Blockchain" is close to useless unless it is coupled with being public, permissionless, borderless among other things. The companies that jumped on this "Blockchain" "DLT" nonsense bandwagon to this day do not understand any of the fundamentals. Just using a distributed ledger does not provide any benefits that they try to borrow from likes of Bitcoin. Distributed ledgers have existed for decades.
Anyone that holds bitcoin is using it everyday as a store of value. It's unnecessary to go into all the reasons Bitcoin makes sense in this thread, plenty of resource out there. Suffice to say that by any measure, market determined or otherwise, Bitcoin's usage has constantly (or even exponentially) increased since inception. Either this hoard of people are getting more and more wrong every year, or perhaps you're looking at it from the wrong angle.
Anyone that holds bitcoin is using it everyday as a store of value. It's unnecessary to go into all the reasons Bitcoin makes sense in this thread, plenty of resource out there. Suffice to say that by any measure, market determined or otherwise, Bitcoin's usage has constantly (or even exponentially) increased since inception. Either this hoard of people are getting more and more wrong every year, or perhaps you're looking at it from the wrong angle.
I now barely use my bank account, i get paid in dai, i pay others in dai. occasionally i have to move dai into fiat for bills. hopefully these central bank digital currencies help bridge that last step.
i love it because i can write programs to move my money around. I can stream payments with https://sablier.finance i can lend and borrow with https://aave.com I get paid universal basic income each hour from https://www.proofofhumanity.id I use https://yearn.finance/ and https://app.pooltogether.com/ as my savings accounts.
I can take a loan against my collateral with https://alchemix.fi/ to buy things irl. I have a https://monolith.xyz/ visa card to pay for things with my crypto (until bridges arrive).
I can organise with others in https://app.daohaus.club/ and vote in https://snapshot.org/
At what point have we satisfied your criteria for making something useful and successful? I use it everyday, it works great for me.
(all of the above is just a small set of projects on ethereum)
i love it because i can write programs to move my money around. I can stream payments with https://sablier.finance i can lend and borrow with https://aave.com I get paid universal basic income each hour from https://www.proofofhumanity.id I use https://yearn.finance/ and https://app.pooltogether.com/ as my savings accounts.
I can take a loan against my collateral with https://alchemix.fi/ to buy things irl. I have a https://monolith.xyz/ visa card to pay for things with my crypto (until bridges arrive).
I can organise with others in https://app.daohaus.club/ and vote in https://snapshot.org/
At what point have we satisfied your criteria for making something useful and successful? I use it everyday, it works great for me.
(all of the above is just a small set of projects on ethereum)
I should clarify, Ethereum isn't merely "Blockchain technology", it's a more programmable Bitcoin (with other trade offs of course). In that sense, it's useful for the reasons you mentioned. The point applies more to projects that think they can replicate some form of this success by just hashing a block and stringing them together.
A lot of jurisdictions if everything goes wrong:
https://www.proofofhumanity.id/ - exists since 2021-01-20 | whois unavailable | 1 Guy from Brazil on Github
https://yearn.finance/ - exists since 2020 | Iceland
https://sablier.finance - iceland
https://app.pooltogether.com | canada
https://alchemix.fi/ Charlestown? - France
monolith.xyz | US
No thanks. I'll keep everything through the bank in my country, which I can call everytime if something would be wrong.
https://www.proofofhumanity.id/ - exists since 2021-01-20 | whois unavailable | 1 Guy from Brazil on Github
https://yearn.finance/ - exists since 2020 | Iceland
https://sablier.finance - iceland
https://app.pooltogether.com | canada
https://alchemix.fi/ Charlestown? - France
monolith.xyz | US
No thanks. I'll keep everything through the bank in my country, which I can call everytime if something would be wrong.
Those are mostly just front ends (expect monolith which is just for visa, not a long term thing), I can make/host my own front ends for the protocols if i want.
e.g. the yearn dai vault address is 0x19D3364A399d251E894aC732651be8B0E4e85001 i can call the functions at that address via my own node with my own code if i want to.
It isn't in a jurisdiction, no-one else is responsible for my money but me. That comes with risk sure, but it also comes with liberty. They are decentralized applications and I can always opt out and move somewhere else. I can take their code for their financial application, fork it and re-deploy my own version under my central control if i wanted too. Imagine forking a HSBC savings account. It is wild and crazy. Some people don't like that. I love it.
You can feel free to do as you like. A lot of the interest in crypto is that if these tools allow people to coordinate and communicate more effectively than the old tools, then they will come to replace them. If it works as we imagine then you may end up using it and not even knowing.
e.g. the yearn dai vault address is 0x19D3364A399d251E894aC732651be8B0E4e85001 i can call the functions at that address via my own node with my own code if i want to.
It isn't in a jurisdiction, no-one else is responsible for my money but me. That comes with risk sure, but it also comes with liberty. They are decentralized applications and I can always opt out and move somewhere else. I can take their code for their financial application, fork it and re-deploy my own version under my central control if i wanted too. Imagine forking a HSBC savings account. It is wild and crazy. Some people don't like that. I love it.
You can feel free to do as you like. A lot of the interest in crypto is that if these tools allow people to coordinate and communicate more effectively than the old tools, then they will come to replace them. If it works as we imagine then you may end up using it and not even knowing.
But you're using all sort of things which i already have access to.
I wouldn't want all my money on a platform with "risks", for something i already have.
Could be fun, doesn't make it useful though.
I wouldn't want all my money on a platform with "risks", for something i already have.
Could be fun, doesn't make it useful though.
This stuff doesn't scale.
The 99% is represented by the regular normie citizen who likes intermediaries because they don't want the responsibility.
The legacy financial system with intermediaries didn't emerge from some evil dictators pushing it onto the world.
It spurred from the market desires, and the market is made up of the regular normie citizens AKA the 99%
Despite what the headlines say, the 99% as a whole controls 99% of the total wealth and they dictate the rules
The 99% is represented by the regular normie citizen who likes intermediaries because they don't want the responsibility.
The legacy financial system with intermediaries didn't emerge from some evil dictators pushing it onto the world.
It spurred from the market desires, and the market is made up of the regular normie citizens AKA the 99%
Despite what the headlines say, the 99% as a whole controls 99% of the total wealth and they dictate the rules
Maybe it doesnt scale? lets try it. Maybe 99% of people dont want to use it? Cool, lets try it.
We don't have to be 100% better, we have to be 0.1% better. I think that is absolutely in reach. I think that will be transformational for many. It will not bring us utopia, it might have bad side effects, hopefully the good outweighs the bad.
And is this not spurred from market desires too? How do we know the difference between genuine forces of innovation and a temporary trend?
I remember using the internet for the first time in the late 90s, it was slow and clunky and magical. We had twenty years of silicon valley startup culture, there was some fun there, but it is so tired. Crypto-communities are the most fun i've had on the internet in a long long time. And the DeFi/DAO/Ethereum stacks feel magical.
Maybe i'm wrong and it is nothing in the long term, but maybe we dont have to assume the authority of the legacy system is legitimate. Maybe the feeling of liberation it brings with it, and the love in the community, will drive the space to continue to out-perform the markets, out-innovate the fintech startups, and out-last the legacy systems.
We don't have to be 100% better, we have to be 0.1% better. I think that is absolutely in reach. I think that will be transformational for many. It will not bring us utopia, it might have bad side effects, hopefully the good outweighs the bad.
And is this not spurred from market desires too? How do we know the difference between genuine forces of innovation and a temporary trend?
I remember using the internet for the first time in the late 90s, it was slow and clunky and magical. We had twenty years of silicon valley startup culture, there was some fun there, but it is so tired. Crypto-communities are the most fun i've had on the internet in a long long time. And the DeFi/DAO/Ethereum stacks feel magical.
Maybe i'm wrong and it is nothing in the long term, but maybe we dont have to assume the authority of the legacy system is legitimate. Maybe the feeling of liberation it brings with it, and the love in the community, will drive the space to continue to out-perform the markets, out-innovate the fintech startups, and out-last the legacy systems.
I get what you say.
But I think you are projecting yourself onto the regular citizen.
The thing which up to now the crypto world has managed to capture about the regular citizen is its fear of inflation and strong preference for deflation which allows him to increase his net worth without doing any work, just by sheer deflationary force baked in the protocol.
From a purely financial return standpoint: If DeFi/DAO/Eth is what the internet was back in the days, then it's IRC.
IRC didn't make any money. Facebook which is the dictionary definition of tired and not fun...well it will smash the record as the fastest Company from 0 to 1T.
So the equivalent to that would be betting on the Bank which decides to make Buterin the CEO or the maybe a new properly regulated fintech startup which wears the mantle of DeFi and the PR of Eth, but it's really an old school intermediary.
I get what you are saying about fun, but fun and finances shouldn't be mixed, in my opinion. Because you'll never know what other people who are not yourself would consider fun and if they'd jump on board to legitimize the community and have the token/stock you invested in appreciate
But I think you are projecting yourself onto the regular citizen.
The thing which up to now the crypto world has managed to capture about the regular citizen is its fear of inflation and strong preference for deflation which allows him to increase his net worth without doing any work, just by sheer deflationary force baked in the protocol.
From a purely financial return standpoint: If DeFi/DAO/Eth is what the internet was back in the days, then it's IRC.
IRC didn't make any money. Facebook which is the dictionary definition of tired and not fun...well it will smash the record as the fastest Company from 0 to 1T.
So the equivalent to that would be betting on the Bank which decides to make Buterin the CEO or the maybe a new properly regulated fintech startup which wears the mantle of DeFi and the PR of Eth, but it's really an old school intermediary.
I get what you are saying about fun, but fun and finances shouldn't be mixed, in my opinion. Because you'll never know what other people who are not yourself would consider fun and if they'd jump on board to legitimize the community and have the token/stock you invested in appreciate
> This just shows that blockchain is a good technology.
At no point does the original article mention blockchain, which actually improves its credibility given a Central Bank Digital Currency would not benefit from a public blockchain (as distinct from a permissioned distributed ledger).
At no point does the original article mention blockchain, which actually improves its credibility given a Central Bank Digital Currency would not benefit from a public blockchain (as distinct from a permissioned distributed ledger).
Explore digital currencies is highly likely to be blockchain
> Meanwhile, the Bank of England also announced a new omnibus bank account, a special account at the central bank targeted at regulated payment systems. The new account is well-suited to Fnality, the blockchain-based payment system owned by 15 institutions.
And they ( bank of England) already have blockchain tech to settle between banks : https://www.fnality.org/home
> Meanwhile, the Bank of England also announced a new omnibus bank account, a special account at the central bank targeted at regulated payment systems. The new account is well-suited to Fnality, the blockchain-based payment system owned by 15 institutions.
And they ( bank of England) already have blockchain tech to settle between banks : https://www.fnality.org/home
I don't see how digital currency based on bitcoin architecture will be attractive to banks AT ALL. AT ALL. You can't "double spend" bitcoin, which is the sine qua non of BANKING! You can't "create" bitcoin into existence to make a loan as banking does all the time. What is this canard of CBDC....i don't understand what their game is!
what was so wrong with my comment? already voted down? by who and for what? are we supposed to "rah-rah" the tech being pushed here without thinking?
Bitcoin, et al. seek to approximate a monetary system, to bootstrap a workable currency outside the traditional trappings of a centralized state. Being digital is not the point, it just makes the idea possible whether or not it works in practice.
What exactly would a central bank “digital currency” bring to the table?
Dollars, pounds, yen, are already digital.
What exactly would a central bank “digital currency” bring to the table?
Dollars, pounds, yen, are already digital.
The change here, from what I can tell, is that you could have consumers directly dealing with the central bank, holding accounts directly with it, cutting out the traditional retail banks.
I'm not sure one way or another if that's a good idea, and I guess they aren't either, hence the forming a committee to investigate.
I'm not sure one way or another if that's a good idea, and I guess they aren't either, hence the forming a committee to investigate.
This process of cutting out traditional retail banks destroys liquidity, which the central bank knows it would probably have to offset through either becoming an explicit uncollateralised lender to banks or other monetary policy.
They are likely to be very conservative about that.
Indeed, that's the biggest change I could think of. Another, minor but important, change is CBDC will completely eliminate physical cash. How will that pan out is to be seen.
FWIW, China has been the farthest on this path to the extent that they are claiming they will do a 100% rollout by next year's Winter Olympics.
This is a really interesting phase in this space.
FWIW, China has been the farthest on this path to the extent that they are claiming they will do a 100% rollout by next year's Winter Olympics.
This is a really interesting phase in this space.
If a business wants to hold cash outside of a bank, it has to use bank notes. This would give them the option of holding digital currency directly.
Also you'd expect a ground up design of a digital first currency to include much lower cost of transfers enabling micro transactions and much better speed to settle.
Also you'd expect a ground up design of a digital first currency to include much lower cost of transfers enabling micro transactions and much better speed to settle.
This can be achieved while retaining the existing banking system.
https://nppa.com.au/the-platform/
https://nppa.com.au/the-platform/
It is a headache for banks, as they lose some of the rents (all kinds of public funds going through them). This should have no impact on cryptocurrencies.
I can already have an entirely digital bank account from at least three "challenger" banks. There are also now at least two business accounts that also entirely virtual. "Faster Payments" (customer bank transfers) are delivered in seconds.
I can see a need for speeding up BACS, and reducing the price of CHAPS, but apart from that, there isn't much wrong with the pound.
changing to having an open ledger(bitcoin style) isn't entirely great as a normal citizen. I don't really want my entire financial history to be picked over by advertisers, insurance companies, future employers, and spam/scam bots.
A government isn't ever going to allow a normal citizen to have a anonymous payments system so I don't see them allowing a purely private and anonymous currency (ala-monero)