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To me, the biggest risk of CBDCs and other "smart" money ideas, is potentially mucking with the fungibility of our money. In the book Sapiens, one of the topics
by largbae 5y ago
To me, the biggest risk of CBDCs and other "smart" money ideas, is potentially mucking with the fungibility of our money. In the book Sapiens, one of the topics is that money is the greatest force unifying humanity, above empires and ideologies. Even the "enemy" North Korean Won has _some_ exchange rate against the US Dollar and other currencies of the world.
If CBDC transactions can be turned off at will or forbidden by region or whatnot, then it might just have no exchange rate, and break the unifying bond of money. I know that there are ways to freeze bank assets or swift transactions, but CBDCs seem much more powerful at this early stage.
- BuyMyBitcoins 5y agoI’m not disagreeing with you, but I’m wondering if there have been cases in the past where central banks have broken fungibility based on region or bank assets. The thing that immediately comes to mind are those “HAWAII” federal reserve notes in WWII which were meant to become worthless should Japan have invaded successfully. That never came to pass, but I’m wondering if that historical event is similar to the kind of thing you are talking about?
- largbae 5y agoExactly, I didn't know about that case but it seems like the rules were presented up front. I think it would only take a few alterations of the deal to panic a smart currency.... And maybe that's why governments won't actually mess with it.
- jl2718 5y agoYou raise an interesting point. What is the real effect of black market transactions? Is there any positive economic effect? Is fungibility actually necessary, or is it just a quick fix to the problem of value discovery?