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Can anyone with more of a background in central banking describe what this means in more concrete terms (or explain that this is fluff). The best I can find fo

by PJDK 6y ago

Can anyone with more of a background in central banking describe what this means in more concrete terms (or explain that this is fluff). The best I can find for what this means is in the PDF "In this report, the term digital euro denotes a liability of the Eurosystem recorded in digital form as a complement to cash and central bank deposits. The analysis focuses on the design of a digital euro for use in retail transactions available to the general public – that is, including citizens and non-bank firms – rather than only being available to traditional participants (typically banks) in the large-value payment system managed by the central bank." Is this not how the system already works? Presumably there is not a 1 <> 1 mapping of owned Euros to bank note/coins? The report talks a lot about unbanked people, innovation in payments and so on, but I don't really see how those things relate.

perfunctory 6y ago
This is how I understand it Right now, if you, for convenience reasons, don't want to carry cash around but want to pay digitally you are basically forced to open a commercial bank deposit. That has some implications - risk - bank can go out of business (though it's insured. But then again the cost of the insurance is baked into the system even though you might not see it directly) - bank can invest your money on your behalf without you having any say in how it's invested (say in a coal plant in India) With digital euro private individuals will gain ability to open accounts directly with the central bank which solves both problems. Central bank cannot go out of business (by definition), and they are not in the investment business. So digital euro would really be a digital version of the bank notes under the mattress.
- toomuchtodo 6y ago
  It's a great idea imho, but requires central banks to more rapidly modernize (both from a technology and policy perspective). It banks the unbanked or underbanked, and it provides basic financial services to citizens as they should be treated: as a utility (no cost citizen deposit accounts, low cost instant payments, etc). This would also enable policy efforts the ECB wants to champion (srgseg has a great comment about this [1]). There are efforts on the US Fed front to push for this also [2]. [1] https://news.ycombinator.com/item?id=24688205 https://news.ycombinator.com/item?id=24688205 [2] https://news.ycombinator.com/item?id=24593343 https://news.ycombinator.com/item?id=24593343
hehetrthrthrjn 6y ago
There are only two types of euros: notes that are physical evidence of said money, and deposits in banks. You can transact by exchanging notes or by instructing your bank to perform a transfer. Both have limitations with the second being that you have to involve banks in the transaction and have a bank account, etc. Digital currency has all the benefits of both methods with none of the drawbacks. No bank account required, no banks required (other than the ECB, but they are also required for bank notes), instant exchange, privacy, in person or distant transactions, etc.
- guenthert 6y ago
  With the prevalent, justified or not, concerns regarding tax evasion, corruption and money laundering in the EU, I very much doubt that the digital Euro will prioritize preserving privacy. I rather think of the digital Euro of an attempt to finally get rid of bank notes (large ones first) in order to curb aforementioned ills.
- wcoenen 6y ago
  > There are only two types of euros: notes that are physical evidence of said money, and deposits in banks. There are also "bank reserves", which is the money sitting in the accounts that banks have at the central bank. Bank reserves, unlike deposits in a commercial bank, are equivalent to notes and coins and can be thought of as the current form of the digital euro. Banks use it for settlement of transactions between them. So the idea is to make this "real" digital money directly available to individuals and companies, like physical cash.
xiphias2 6y ago
Central banks are jelous of stable coins getting traction, and it seems that they want to create competition, which is a good thing. The problem seems that even they can't decide what they want and how they want to implement it. Stable coins can be owned by any entity using a private key without KYC regulations (that don't fit the central banking system), but if KYC regulations are required (just like with opening a bank account), hundreds of millions of people (or even billions) are probably left behind again in the world.
- darkcha0s 6y ago
  I don't think they are 'jealous' of anything. The central banks have no incentive to create competition on money markets, their central issue is creating a stable currency that fluctuates little in value; creating another 'coin' would go against that cornerstone. I think you are trying to shoe horn in the idea of this being a crypto / blockchain backed thing, which (while it might be implemented on top of such) it is definitively not.
  - xiphias2 6y ago
    They are specifically mentioning stable coins as an inspiration/competition. When you have to say why your product is better than another, you are definitely taking it seriously. Of course cryptocurrencies are not short term risk for central banks, but they already have some advantages that grow long term.
    - darkcha0s 6y ago
      You didn't read the entire article, did you? They go on to say that they are specifically different than crypto, because they are backed by a central bank. That makes a world of a difference.
Proven 6y ago
> The report talks a lot about unbanked people, innovation in payments and so on, but I don't really see how those things relate. You are onto something. Yes, they truly are clueless fools. But 99% of people won't notice. Makes me wonder: if I'm underbanked today how am I going to get right-banked with digi-euros? Don't I need a bank account? Is the ECB going to create a no-questions-asked bank account for anyone with a phone, no KYC and similar crap meant for regular customers of private banks? Such innovation! Screw the sclerotic private banks - I only need to deal with the One Bank, the ECB!!! It's for the children!

by PJDK 6y ago

perfunctory 6y ago

This is how I understand it Right now, if you, for convenience reasons, don't want to carry cash around but want to pay digitally you are basically forced to open a commercial bank deposit. That has some implications - risk - bank can go out of business (though it's insured. But then again the cost of the insurance is baked into the system even though you might not see it directly) - bank can invest your money on your behalf without you having any say in how it's invested (say in a coal plant in India) With digital euro private individuals will gain ability to open accounts directly with the central bank which solves both problems. Central bank cannot go out of business (by definition), and they are not in the investment business. So digital euro would really be a digital version of the bank notes under the mattress.

toomuchtodo 6y ago
It's a great idea imho, but requires central banks to more rapidly modernize (both from a technology and policy perspective). It banks the unbanked or underbanked, and it provides basic financial services to citizens as they should be treated: as a utility (no cost citizen deposit accounts, low cost instant payments, etc). This would also enable policy efforts the ECB wants to champion (srgseg has a great comment about this [1]). There are efforts on the US Fed front to push for this also [2]. [1] https://news.ycombinator.com/item?id=24688205 https://news.ycombinator.com/item?id=24688205 [2] https://news.ycombinator.com/item?id=24593343 https://news.ycombinator.com/item?id=24593343

hehetrthrthrjn 6y ago

There are only two types of euros: notes that are physical evidence of said money, and deposits in banks. You can transact by exchanging notes or by instructing your bank to perform a transfer. Both have limitations with the second being that you have to involve banks in the transaction and have a bank account, etc. Digital currency has all the benefits of both methods with none of the drawbacks. No bank account required, no banks required (other than the ECB, but they are also required for bank notes), instant exchange, privacy, in person or distant transactions, etc.

guenthert 6y ago
With the prevalent, justified or not, concerns regarding tax evasion, corruption and money laundering in the EU, I very much doubt that the digital Euro will prioritize preserving privacy. I rather think of the digital Euro of an attempt to finally get rid of bank notes (large ones first) in order to curb aforementioned ills.
wcoenen 6y ago
> There are only two types of euros: notes that are physical evidence of said money, and deposits in banks. There are also "bank reserves", which is the money sitting in the accounts that banks have at the central bank. Bank reserves, unlike deposits in a commercial bank, are equivalent to notes and coins and can be thought of as the current form of the digital euro. Banks use it for settlement of transactions between them. So the idea is to make this "real" digital money directly available to individuals and companies, like physical cash.

xiphias2 6y ago

Central banks are jelous of stable coins getting traction, and it seems that they want to create competition, which is a good thing. The problem seems that even they can't decide what they want and how they want to implement it. Stable coins can be owned by any entity using a private key without KYC regulations (that don't fit the central banking system), but if KYC regulations are required (just like with opening a bank account), hundreds of millions of people (or even billions) are probably left behind again in the world.

darkcha0s 6y ago
I don't think they are 'jealous' of anything. The central banks have no incentive to create competition on money markets, their central issue is creating a stable currency that fluctuates little in value; creating another 'coin' would go against that cornerstone. I think you are trying to shoe horn in the idea of this being a crypto / blockchain backed thing, which (while it might be implemented on top of such) it is definitively not.
- xiphias2 6y ago
  They are specifically mentioning stable coins as an inspiration/competition. When you have to say why your product is better than another, you are definitely taking it seriously. Of course cryptocurrencies are not short term risk for central banks, but they already have some advantages that grow long term.
  - darkcha0s 6y ago
    You didn't read the entire article, did you? They go on to say that they are specifically different than crypto, because they are backed by a central bank. That makes a world of a difference.

Proven 6y ago

> The report talks a lot about unbanked people, innovation in payments and so on, but I don't really see how those things relate. You are onto something. Yes, they truly are clueless fools. But 99% of people won't notice. Makes me wonder: if I'm underbanked today how am I going to get right-banked with digi-euros? Don't I need a bank account? Is the ECB going to create a no-questions-asked bank account for anyone with a phone, no KYC and similar crap meant for regular customers of private banks? Such innovation! Screw the sclerotic private banks - I only need to deal with the One Bank, the ECB!!! It's for the children!