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It’s still not at all clear to me why crypto-currencies are even being considered for CBDC’s. Is the justification in the paper and I’m just missing it?

f38zf5vdt 5y ago
They don't seem to be, from the paper. > Some purport that a CBDC must be built on distributed ledger technology; this is putting the cart before the horse. > Architecture 7 is proposed by some blockchain advocates; they suggest that a central bank issue digital currency on an existing blockchain system. This might be a smart contract platform like Ethereum or a permissioned blockchain like Facebook’s Diem. Under this type of architecture, a central bank could control issuance of the digital currency, but would give up all other control to the governance of the underlying blockchain. For example, the participants in the blockchain network might decide to reverse a transaction, as happened in Ethereum after one of its smart contracts, the DAO, was hacked. Ethereum developers, miners, and community members cooperated to reverse the hack and restore funds.15 It is extremely unlikely any central bank would want to put this level of control in the hands of blockchain operators. Blockchain networks are open and accessible and have high levels of innovation, though there has not necessarily been a concerted effort to add features to support financial inclusion.
- hammock 5y ago
  Is that much different than the current system, where the Fed gives the money to the primary dealers (big banks) who then do with it whatever they wish?
  - f38zf5vdt 5y ago
    In the transcript they make accessibility to the average person a clear goal, i.e., a physical cash surrogate for a digital world. > Architecture 4 is deemed “two-tier” CBDC in that it is expected that the CBDC will only be accessible through commercial banks.11 This implies that a user will need to obtain an account with a commercial bank in order to receive and transact in the CBDC. This design is appealing because it preserves the current structure in electronic payments, but at the same time, it is unclear how this design alone will help promote financial inclusion in the US because it does not appear to address the main reasons why the unbanked do not use banks. > All of these architectures need to be carefully evaluated for their potential to improve financial inclusion, risks and complexity of implementation, monetary and economic implications, and the potential to affect the cost of credit and financial stability.
- headmelted 5y ago
  Thanks!!

f38zf5vdt 5y ago

They don't seem to be, from the paper. > Some purport that a CBDC must be built on distributed ledger technology; this is putting the cart before the horse. > Architecture 7 is proposed by some blockchain advocates; they suggest that a central bank issue digital currency on an existing blockchain system. This might be a smart contract platform like Ethereum or a permissioned blockchain like Facebook’s Diem. Under this type of architecture, a central bank could control issuance of the digital currency, but would give up all other control to the governance of the underlying blockchain. For example, the participants in the blockchain network might decide to reverse a transaction, as happened in Ethereum after one of its smart contracts, the DAO, was hacked. Ethereum developers, miners, and community members cooperated to reverse the hack and restore funds.15 It is extremely unlikely any central bank would want to put this level of control in the hands of blockchain operators. Blockchain networks are open and accessible and have high levels of innovation, though there has not necessarily been a concerted effort to add features to support financial inclusion.

hammock 5y ago
Is that much different than the current system, where the Fed gives the money to the primary dealers (big banks) who then do with it whatever they wish?
- f38zf5vdt 5y ago
  In the transcript they make accessibility to the average person a clear goal, i.e., a physical cash surrogate for a digital world. > Architecture 4 is deemed “two-tier” CBDC in that it is expected that the CBDC will only be accessible through commercial banks.11 This implies that a user will need to obtain an account with a commercial bank in order to receive and transact in the CBDC. This design is appealing because it preserves the current structure in electronic payments, but at the same time, it is unclear how this design alone will help promote financial inclusion in the US because it does not appear to address the main reasons why the unbanked do not use banks. > All of these architectures need to be carefully evaluated for their potential to improve financial inclusion, risks and complexity of implementation, monetary and economic implications, and the potential to affect the cost of credit and financial stability.
headmelted 5y ago
Thanks!!