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Important note: central bank digital currencies are not crypto currrencies. They are not block chains. They are not decentralized. They are not permissionless.
by anm89 6y ago
Important note: central bank digital currencies are not crypto currrencies. They are not block chains. They are not decentralized. They are not permissionless. I cannot find a record of any CBDC which clearly states that it want's to use any of these technologies. I'd be interested to be proven wrong.
Central bank digital currencies are essentially a new hybrid monetary/fiscal policy tool. Historically the Federal reserve and many other central banks function by buying and selling the debt of their sovereignty to influence interest rates. They pay for these securities by essentially creating money that didn't exist before and trading it to an institution for their debt security. For a long time this money has just been digital, when the Fed creates money to buy a bond from JP Morgan, all they do is to update a line in a database. So they already have a digital currency, but only for dealing with large institutions.
The idea of these new CBDCs is to setup a similar system but where the digital currency could be distributed to individual citizens. This would give the Fed a more powerful tool than it has ever had before because giving money directly to people is almost guaranteed to create real economic activity unlike adding to bank reserves(which is why we haven't seen meaningful inflation after 11 years of the Fed spamming reserve creation).
Some of this is lightly speculative but a detailed scheme which is almost exactly this was already proposed in a bill to congress, The Banking For All Act: https://www.congress.gov/bill/116th-congress/senate-bill/3571/text https://www.congress.gov/bill/116th-congress/senate-bill/357...
I don't think it is hyperbolic to say that CBDCs are the "how" part of MMT. They take most of the logistical difficulties out of direct to citizen cash transfers and this is their primary goal.
- erentz 6y agoIf you really just want everyone to have access to banking, create post banking. [1] Then, if you really just want everyone to get monthly checks from the government, deposit them electronically. That’s all you need to do. This already works in many countries. It can even work in the US with a bit of spit and polish (we used to have a post banking service and it’s been proposed to be reinstated). [1] https://en.m.wikipedia.org/wiki/Postal_savings_system https://en.m.wikipedia.org/wiki/Postal_savings_system
- LargoLasskhyfv 6y agoAs a german I don't see it. We had the "Postbarscheck", which is now gone. Since maybe about 20 years? That is not the direction they/them/the Reptiloids want to march the human cattle in. There need to be more efficient 'dig it all' threadmills. Anyways. Don't care. Am banked. Multiple times. Even have Alipay, Yay!
- danialtz 6y ago> Important note: central bank digital currencies are not crypto currrencies. They are not block chains. They are not decentralized. They are not permissionless. I cannot find a record of any CBDC which clearly states that it want's to use any of these technologies. I'd be interested to be proven wrong. Indeed, by default almost majority of CBDCs are permissioned chains since CB is the only authority to create money and destroy, aka mint. Technology-wise though you‘d be surprised. Most of the solutions out there are actually DLT based, almost all blockchain based. There are modern aspects that work differently than other cryptos (well, borrowed), e.g. there are permissioned blockchain solutions that allow „channels“ to be private. This allows a bank to still be on a ledger while txns are hidden from other banks. They are also decentralized because Central banks are not high tech companies, but they have trusted middle layer still to be fast and cheap at some other disadvantages for citizen, e.g. control.
- bawolff 6y agoThis makes no sense. Are you saying that digital currency is a fancy term for a direct deposit? We've had direct deposits for a very long time. My tax refund comes as a direct deposit. The government seems to be able to directly give me money digitially just fine.
- Mengkudulangsat 6y agoYou know what's new that hasn't been done before? Your government giving money to me (not a citizen) in an effort to popularize your currency. If President Xi wants to gift me some digital Yuan to spend how I wish (so the Yuan becomes more accepted outside China).. I say hell, why not?
- anm89 6y ago> Are you saying that digital currency is a fancy term for a direct deposit? Basically yes, but specifically only for the case of a direct deposit between the Federal reserve and an individual. That doesn't currently exist. But that's also basically my point. CBDCs are nothing new from an operational or technological perspective which I think is something many people are getting confused about. They are a new thing in terms of policy capabilities for central banks. They are not a new thing in any other way. All the technology already exists.
- bawolff 6y agoFair enough. I guess it feels almost unbelievable that all this fuss is over something so mundane. I guess i dont really understand why though. It sounds like the central bank is thinking about becoming, well, a normal bank. We already have normal banks. Governments can already transfer cash to accounts in normal banks. Governments can already sell bonds to people who want some sort of very stable investment backed by the state. What's the point of becoming a consumer bank? Why are they bothering? How do they benefit? Is there anything to this other than the desire to jump aboard the anything-that-sounds-remotely-like-bitcoin-even-if-unrelated hype train.
- sanxiyn 6y ago
- surfsvammel 6y agoCentral bank digital currencies can be blockchain based, they can be decentralised etc. In fact, he central banks that I have spoken to would rather have a decentralised currency, because it would mean less work for them. The motivation of a central bank is easy; make sure the currency is liquid, make sure they can use the currency to affect inflation and so forth. Whatever setup gives them the best ability to meet those kinds of goals will be what decided what they go for. They motivation and goals are quiet unique in that sense, it is totally different from the commercial banks or the private sector. Therefore I do believe we will see proper blockchain, decentralised, systems in the future.
- anm89 6y agoThe central bank is CENTRAL. They want to CENTRALLY coordinate monetary activity. They are never going to sign up to decentralize their one policy tool. I don't disagree that it is technically feasible to implement these on a block chain, and I think it is possible that there may be some effort to tokenize a currency to track it on a block chain in a secondary way, but that is very different from the block chain being the irrefutable source of truth for ownership of the currency for a sovereign. That will never happen.
- surfsvammel 6y agoI do not agree. And I think the fact that almost every central bank around is showing interest in the idea, and some perusing it more than others, could be seen as arguments against your position. I think it’s very simple. The central banks are given an assignment and a goal by the government, in many ways it has become harder for them to do that; making sure the currency is liquid and people have means of payment, for example in situations of crisis, is much harder today when people are paying less in hard cash monies, and most stuff is electronic or how affecting inflation by means of repo-rates have become much slower and much harder. They need to do something. Having it as a DLT might give them more control, not less, since they could for example add interest rates directly on the currency to affect inflation, rather than having to take the route via the commercial banks. I am not an expert, but I have though quiet a bit about it, and I have a bit of experience with a couple of European central banks. I really do think that we will see this, at least in some placss, it’s just a matter of time.
- geraldbauer 6y agoImportant note: bitcoin is a ponzi [1] and not digital gold. Learn how the investment fraud works. [1] https://github.com/openblockchains/bitcoin-ponzi https://github.com/openblockchains/bitcoin-ponzi
- gillesjacobs 6y agoNo Bitcoin is not a Ponzi. A Ponzi scheme has a very particular set of characteristics. Bitcoin is not even a pyramid scheme. It does not require new buyers for its value to increase. It currently is highly speculative and manic market, possibly a bubble. The quality of your link speaks for itself, it reads like schizoid scribbles.
- thendrill 6y agoUhh.. Where do you think this number that you call "value" comes from? It comes from the crypto exchanges. The value. Is the latest settled sale. So when someone sets a sell price and someone buys at that btc, is when the value is set. So yeh. You absolutely need new buyers for its value to increase.
- gillesjacobs 6y agoNeeding new buyers for price to increase is not the definition of a Ponzi scheme. Because that is true for any speculative asset due to the price setting mechanism. Your argument entails that the price of Bitcoin is highly inflated over its fundamental value, i.e. that it is a speculative bubble. Speculative bubbles are very different from Ponzi schemes. A Ponzi scheme has the following definition according to the SEC: >“A Ponzi scheme is an investment fraud that pays existing investors with funds collected from new investors. Ponzi scheme organizers often promise to invest your money and generate high returns with little or no risk. But in many Ponzi schemes, the fraudsters do not invest the money. Instead, they use it to pay those who invested earlier and may keep some for themselves." Ponzi schemes require a central fraudster to pass on money directly from old to new investors with the underlying asset obfuscatedly held on promise by the fraudster. With cryptocurrency the buyer has control of the commodity, you actually have control of the crypto, there is no promise of a consistent return with little risk, there is no central entity defrauding targets with promises that hold the asset in reserve passing on money directly from new to old investors. What we do have is a speculative bubble which will no doubt be devastating for new investors when it collapses. But the definition of a Ponzi scheme is not met.
- lottin 6y ago> The idea of these new CBDCs is to setup a similar system but where the digital currency could be distributed to individual citizens. I don't think this is the point of CBDC at all. Individual citizens gain nothing with the ability to sell financial assets to the CB, and neither does the CB.
- danialtz 6y agoThe idea here is about security of money: the money stored in the CB ledger does not lose i ts contractual value in difficult times, as it is garanteed by the central bank. Compare that to your money in your bank, which is backed at 10% with fiat reserves. If crisis happens and people want to pull their cash out the bank goes bankrupt. Central banks do not go bankrupt, hence your money is always safe.
- lottin 6y agoSure, but bank deposits are very secure anyway. They are protected by insurance and by central banks which provide liquidity to commercial banks that are experiencing financial distress.
- fvdessen 6y agoI find it funny that when the state designs a new currency, it gives it the exact opposite characteristics as the ones designed by the civilians Edit: I wrongly called the government ones cryptocurrencies
- anm89 6y agoIt's literally not a crypto currency and they aren't claiming it is. There is nothing cryptographic in nature about its implementation.
- carlsborg 6y agoThe BIS released a paper where they argue for permissioned ledgers for central bank digital currencies because you can tie that to identity, government benefits, and things like money laundering. But centralized also means "subject to control by dictatorships" which is not nice.