3 ms·

I can't envisage a central bank digital currency for which the general public user can retain all the keys to an account, as per bitcoin wallets. Crypto people

I can't envisage a central bank digital currency for which the general public user can retain all the keys to an account, as per bitcoin wallets. Crypto people assure me that old style banks would gladly facilitate handing over complete control of all the keys to users but I'm entirely unconvinced. Due to this lack of control, I believe this is the intended endgame: https://blogs.imf.org/2019/02/05/cashing-in-how-to-make-negative-interest-rates-work/ https://blogs.imf.org/2019/02/05/cashing-in-how-to-make-nega...

anm89 5y ago
You are fundamentally misunderstanding CBDCs here by conflating CBDCs with cryptocurrencies. The concept of a CBDC is simply a digital currency where normal people hold digital accounts with the central bank instead of using a retail bank. That's it. No prescription for the storage mechanism. It could be a relational database, a block chain or memory on J Powell's old graphing calculator from highschool. A CBDC is digital in the same way that your credit card is digital. It's just that a computer tracks the Fed liability not a little green piece of paper. Here's a piece of legislation proposing a US CBDC . https://www.congress.gov/bill/116th-congress/senate-bill/3571/text https://www.congress.gov/bill/116th-congress/senate-bill/357... Go look for the words cryptocurrency or blockchain in it. They aren't there. It's simply a mechanism for retail banks to hold "pass through" accounts for consumer accounts at the fed.
- baby 5y ago
  GP is talking about retail CBDC, which is user-facing in addition to being bank-facing only like current central banks. Not all CBDCs talk about retail, and it’s not clear if any would actually aim to provide that feature.
  - anm89 5y ago
    A vast majority of discussion about CBDC is about retail CBDC. Interbank and internation transactions are already digital. The Fed already has wholesale digital liabilities
    - baby 5y ago
      That's not true, and the point of a CBDC is not just that it's digital but that you easily join and use the network. Today interbanking is a mess.
      - toomuchtodo 5y ago
        Interbanking is as mess, but the standard everyone is settling on is ISO 20022 messages and the plumbing will slowly be refactored for pushing these messages around. https://www.iso20022.org/iso-20022 https://www.iso20022.org/iso-20022
- eliasmacpherson 5y ago
  It's not the implementation that is my concern, it is that a digital currency makes it even easier for banks to impose negative rates than cash. I doubt that you really think central banks, retail banks and the imf have no intention to abolish physical cash. Abolishing it is all upside for them.
  - sofixa 5y ago
    Well abolishing cash is almost all upside for everyone. For retailers (companies that accept payments) it's easier, faster, cheaper and safer ( zero risk of theft by staff or robbery). For regular people that pay it's easier, faster, more linear ( if you have to spend X now, you don't have to have withdrawn it from an ATM or bank before). The only downsides are underbanked people and companies, which is an issue in itself and needs to be fixed regardless of cash availability (I'm talking in general, but even more so for developing countries and the US(wasn't it in the news recently that the US Postal Service is going to be cashing checks at some ridiculously expensive rate? Way to get in to the 19th century!)), and of course privacy, for which regulation is needed ( who has access to your payment/transaction data and in what cases) and it's solved for 90% of cases.
    - ivanche 5y ago
      Another big downside: when you pay something with cash, it hurts. It physically hurts. You give your hard earned cash and get back the goods. Cash is gone. But when you pay with a credit card, you give your credit card to cashier, she gives you goods and your card back. It doesn't hurt. Your brain registers this as not spending because you got your card back. As a result, people spend way more when they use cards in comparison with cash.
      - syrgian 5y ago
        In the countries I've lived (Europe, both south and north), financial waste doesn't come from things you pay in cash, but from things we have not paid in cash for decades (rent/mortgage, car loans, monthly services, expensive travel...).
- ulrikrasmussen 5y ago
  I was also puzzled as to why Reuters had chosen a cryptocurrency stock photo for the article.
- w14 5y ago
  > Go look for the words cryptocurrency or blockchain in it. Look at the BIS's annual economic report for this year [0]. They are absolutely talking about retail tokens based on a distributed ledger as one of two retail options, the other being as you describe. [0] https://www.bis.org/publ/arpdf/ar2021e3.htm https://www.bis.org/publ/arpdf/ar2021e3.htm
hvidgaard 5y ago
Suddenly it seems like one should invest in gold or whatever, to counter this.
- Lammy 5y ago
  https://www.youtube.com/watch?v=xfyAzNPzMD0 https://www.youtube.com/watch?v=xfyAzNPzMD0 "Remember: Reality is an illusion; the universe is a hologram; buy gold — bye!"
- walterbell 5y ago
  You can also use cash, to deny data harvesting, which is one of the primary business drivers for CBDCs. Data about money is worth more than money. SF, NYC, Philly, MA and NJ have laws requiring cash acceptance. In addition, NYC passed one of the first bills requiring restaurant delivery apps to share transaction data with restaurants. CBDC advocates are contemplating laws that will affect data (the most valuable asset and not well understood) while focusing most legislative attention on money. Instead, we could start by restoring legal data ownership to individuals. Then banks and fintech and bigtech can compete against each other to gain the consent of individuals for data access, in exchange for services and/or payment, with meaningful access and usage controls. In other words, enforce algorithmic micro-policy on corporate use of individual data, not on individual behavior.

anm89 5y ago

You are fundamentally misunderstanding CBDCs here by conflating CBDCs with cryptocurrencies. The concept of a CBDC is simply a digital currency where normal people hold digital accounts with the central bank instead of using a retail bank. That's it. No prescription for the storage mechanism. It could be a relational database, a block chain or memory on J Powell's old graphing calculator from highschool. A CBDC is digital in the same way that your credit card is digital. It's just that a computer tracks the Fed liability not a little green piece of paper. Here's a piece of legislation proposing a US CBDC . https://www.congress.gov/bill/116th-congress/senate-bill/3571/text https://www.congress.gov/bill/116th-congress/senate-bill/357... Go look for the words cryptocurrency or blockchain in it. They aren't there. It's simply a mechanism for retail banks to hold "pass through" accounts for consumer accounts at the fed.

baby 5y ago
GP is talking about retail CBDC, which is user-facing in addition to being bank-facing only like current central banks. Not all CBDCs talk about retail, and it’s not clear if any would actually aim to provide that feature.
- anm89 5y ago
  A vast majority of discussion about CBDC is about retail CBDC. Interbank and internation transactions are already digital. The Fed already has wholesale digital liabilities
  - baby 5y ago
    That's not true, and the point of a CBDC is not just that it's digital but that you easily join and use the network. Today interbanking is a mess.
    - toomuchtodo 5y ago
      Interbanking is as mess, but the standard everyone is settling on is ISO 20022 messages and the plumbing will slowly be refactored for pushing these messages around. https://www.iso20022.org/iso-20022 https://www.iso20022.org/iso-20022
eliasmacpherson 5y ago
It's not the implementation that is my concern, it is that a digital currency makes it even easier for banks to impose negative rates than cash. I doubt that you really think central banks, retail banks and the imf have no intention to abolish physical cash. Abolishing it is all upside for them.
- sofixa 5y ago
  Well abolishing cash is almost all upside for everyone. For retailers (companies that accept payments) it's easier, faster, cheaper and safer ( zero risk of theft by staff or robbery). For regular people that pay it's easier, faster, more linear ( if you have to spend X now, you don't have to have withdrawn it from an ATM or bank before). The only downsides are underbanked people and companies, which is an issue in itself and needs to be fixed regardless of cash availability (I'm talking in general, but even more so for developing countries and the US(wasn't it in the news recently that the US Postal Service is going to be cashing checks at some ridiculously expensive rate? Way to get in to the 19th century!)), and of course privacy, for which regulation is needed ( who has access to your payment/transaction data and in what cases) and it's solved for 90% of cases.
  - ivanche 5y ago
    Another big downside: when you pay something with cash, it hurts. It physically hurts. You give your hard earned cash and get back the goods. Cash is gone. But when you pay with a credit card, you give your credit card to cashier, she gives you goods and your card back. It doesn't hurt. Your brain registers this as not spending because you got your card back. As a result, people spend way more when they use cards in comparison with cash.
    - syrgian 5y ago
      In the countries I've lived (Europe, both south and north), financial waste doesn't come from things you pay in cash, but from things we have not paid in cash for decades (rent/mortgage, car loans, monthly services, expensive travel...).
ulrikrasmussen 5y ago
I was also puzzled as to why Reuters had chosen a cryptocurrency stock photo for the article.
w14 5y ago
> Go look for the words cryptocurrency or blockchain in it. Look at the BIS's annual economic report for this year [0]. They are absolutely talking about retail tokens based on a distributed ledger as one of two retail options, the other being as you describe. [0] https://www.bis.org/publ/arpdf/ar2021e3.htm https://www.bis.org/publ/arpdf/ar2021e3.htm

hvidgaard 5y ago

Suddenly it seems like one should invest in gold or whatever, to counter this.

Lammy 5y ago
https://www.youtube.com/watch?v=xfyAzNPzMD0 https://www.youtube.com/watch?v=xfyAzNPzMD0 "Remember: Reality is an illusion; the universe is a hologram; buy gold — bye!"
walterbell 5y ago
You can also use cash, to deny data harvesting, which is one of the primary business drivers for CBDCs. Data about money is worth more than money. SF, NYC, Philly, MA and NJ have laws requiring cash acceptance. In addition, NYC passed one of the first bills requiring restaurant delivery apps to share transaction data with restaurants. CBDC advocates are contemplating laws that will affect data (the most valuable asset and not well understood) while focusing most legislative attention on money. Instead, we could start by restoring legal data ownership to individuals. Then banks and fintech and bigtech can compete against each other to gain the consent of individuals for data access, in exchange for services and/or payment, with meaningful access and usage controls. In other words, enforce algorithmic micro-policy on corporate use of individual data, not on individual behavior.