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Central 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 dece

Central 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 ago
The 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 ago
  I 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.
headmelted 6y ago
I could see CBDCs using blockchain solely because someone utterly non-technical, at some higher level in the bureaucracy, insisted that they make a blockchain-based cryptocurrency “so as to not get left behind” or “because we need to compete with Bitcoin”. Clearly neither of those two rationales make any sense whatsoever - and they might even seem like a downright ridiculous suggestion to some readers of this response. If that’s you, then welcome to wild and whacky world of public spending.
- surfsvammel 6y ago
  That’s not me. I but can see how a DLT could work very well as means of a currency. We could have the commercial banks, and others if necessary, run nodes. They could verify payments on “accounts”, or addresses, (if we want to keep the old meaning of bank account, that’s fine, then we could instead call these addresses) which are held by the commercial banks. These addresses could be non-anonymous such that requirement for know-your-customer still reside with the commercial banks (the central banks really don’t want to have to get anyway near KYC requirements). Each such “account”/address could be linked to addresses of currency at the CB, which at that point was anonymous. The CB could then have full control of the issuance of currency, control interest directly on the currency itself, everything being anonymous to the CB.
  - imtringued 6y ago
    The question is, why would banks run nodes? How do they get money to pay for the datacenters?
    - surfsvammel 6y ago
      Well. Same as they do today. Lend money, borrow money (savings), finance ventures and mortgages, services.
  - headmelted 6y ago
    But why do that though? If the currency is going to be centrally issued then what reason is there to use a DLT given all of the drawbacks it would introduce? DLTs aren’t a solution to a technical problem, they’re a technical solution to a trust problem that comes with some pretty hefty implementation baggage and performance constraints. If you have to trust a single issuer anyway (as would be the case with a CBDC) then the core reason for using a DLT doesn’t exist.
deleted 6y ago
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anm89 6y ago

The 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 ago
I 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.

headmelted 6y ago

I could see CBDCs using blockchain solely because someone utterly non-technical, at some higher level in the bureaucracy, insisted that they make a blockchain-based cryptocurrency “so as to not get left behind” or “because we need to compete with Bitcoin”. Clearly neither of those two rationales make any sense whatsoever - and they might even seem like a downright ridiculous suggestion to some readers of this response. If that’s you, then welcome to wild and whacky world of public spending.

surfsvammel 6y ago
That’s not me. I but can see how a DLT could work very well as means of a currency. We could have the commercial banks, and others if necessary, run nodes. They could verify payments on “accounts”, or addresses, (if we want to keep the old meaning of bank account, that’s fine, then we could instead call these addresses) which are held by the commercial banks. These addresses could be non-anonymous such that requirement for know-your-customer still reside with the commercial banks (the central banks really don’t want to have to get anyway near KYC requirements). Each such “account”/address could be linked to addresses of currency at the CB, which at that point was anonymous. The CB could then have full control of the issuance of currency, control interest directly on the currency itself, everything being anonymous to the CB.
- imtringued 6y ago
  The question is, why would banks run nodes? How do they get money to pay for the datacenters?
  - surfsvammel 6y ago
    Well. Same as they do today. Lend money, borrow money (savings), finance ventures and mortgages, services.
- headmelted 6y ago
  But why do that though? If the currency is going to be centrally issued then what reason is there to use a DLT given all of the drawbacks it would introduce? DLTs aren’t a solution to a technical problem, they’re a technical solution to a trust problem that comes with some pretty hefty implementation baggage and performance constraints. If you have to trust a single issuer anyway (as would be the case with a CBDC) then the core reason for using a DLT doesn’t exist.

deleted 6y ago

[deleted]