4 ms·

I’m just confused about this. Isn’t most money system digitized already? When we buy stuff online it is indistinguishable from digital money, and the bank as fa

by m3kw9 5y ago

I’m just confused about this. Isn’t most money system digitized already? When we buy stuff online it is indistinguishable from digital money, and the bank as far as they are concerned is seeing numbers on a screen from a database, which is backed by fractional deposits.

rich_sasha 5y ago
Central bank digital money normally means normal bank account but held directly with the central bank
deleted 5y ago
[deleted]
Kaytaro 5y ago
Yes, the only difference is this currency will be on a blockchain. Although I'm assuming it will be completely centralized so I'm not sure what benefits this will have over a traditional database.
- gogopuppygogo 5y ago
  Gives government more ability to track flow of capital. Hugely awful move for the world to give government more control.
- mistrial9 5y ago
  Eliminate or substantially reduce third-party transaction guarantee fees, and at the same time, one-hundred percent of the transactions are digitally recorded. A preponderance of big finance relies on trusted third-parties to intermediate transactions. Those third parties charge non-negligible fees to execute each and every transaction. Large value transactions can be done between untrusting parties directly, due to rigid cryptographic signing of the transaction record.
  - rlpb 5y ago
    None of these features require a blockchain and can be done trivially by a central authority issuing append-only cryptographically signed ledger entries. > Large value transactions can be done between untrusting parties directly... What's the benefit of this when the bank has to accept a cleared record for a party to withdraw funds anyway?
    - mistrial9 5y ago
      > None of these features require a blockchain and can be done trivially what can be done and what is done -- different. You might want to tell those companies that charge a fee to guarantee the transaction, that they can just trivially stop doing that now.
    - rattlesnakedave 5y ago
      >None of these features require a blockchain and can be done trivially by a central authority issuing append-only cryptographically signed ledger entries. Why would you want to depend on a central authority when you can have a network of trusted blockchain users all signing and broadcasting their transactions to each-other in real time, without an intermediary? Why hamstring yourself with a database and the upgradability woes therein, when you can use a blockchain? >What's the benefit of this when the bank has to accept a cleared record for a party to withdraw funds anyway? With a permissioned blockchain, the funds can be cleared much faster (instantly?) than in the current system. I left another comment about this. These technologies are very powerful and not thoroughly explored in a permissioned context for use by traditional finance.
      - rlpb 5y ago
        > Why would you want to depend on a central authority when you can have a network of trusted blockchain users all signing and broadcasting their transactions to each-other in real time, without an intermediary? You're already depending on a central authority to back your funds. So forcing a blockchain into the mix just introduces that additional complexity and risk, not a new dependency on a central authority. > Why hamstring yourself with a database and the upgradability woes therein, when you can use a blockchain? You're conflating "blockchain" with "distributed database". For example, a trivial example is a git repository storing ledger entries. It's distributed, can be used in an append-only fashion (and enforced at a higher layer), and such a system probably doesn't have the "upgradability woes" you're worried about. It's not a blockchain. > With a permissioned blockchain, the funds can be cleared much faster (instantly?) than in the current system. This can also be arranged without a blockchain.
ne0flex 5y ago
Basically it means that you'll have a bank account directly with the government. They'll be able to monitor every transaction you make from that account and block transactions on your account. It'll also give the government the ability to add conditions to your money (ie. you need to spend X amount of yen / dollars this month or your money will expire and you'll lose it), or your money can only be spent at approved stores.
- cortesoft 5y ago
  The government can do way worse than add conditions to your money. They can arrest you and put you in jail. They can already take all your money. They can take it no matter what form you put it n in.
  - roywiggins 5y ago
    Yes, one day India invalidated just about all their physical bills. https://www.bbc.com/news/world-asia-india-37974423 https://www.bbc.com/news/world-asia-india-37974423
  - chii 5y ago
    > They can take it no matter what form you put it n in. tell that to criminals and money launderers!
- hogFeast 5y ago
  This is specifically not what this is. Banks in Japan have a central role in the economy so the govt has no wish to remove the ability of banks to create money (they are also have a lot of political power). The digital currency will be backed by bank deposits, and the aim of this appears to be creating a interbank payments system that can run with lower costs.
- ac29 5y ago
  The article says this is being run by a group of banks and other businesses, not the government.
  - 5y ago
323 5y ago
When people say "digital money" they mean being able to for example move it from one account to another with a few lines of Python code, like you can with Bitcoin/Ethereum/Tether. You can't really do that with USD, you need an intermediary like Stripe, an attached bank account, ...
- cortesoft 5y ago
  Yeah, but this new system will still have a middleman, the bank...
  - 323 5y ago
    Not necessarily a middleman. The banks will back the digital coin, but might not be much involved in transfers (we'll see). A bit like physical cash, it is backed by the gov, but you don't need to involve the gov to transfer it.
    - edgyquant 5y ago
      I wonder if it would be ideal for a separate company, not the banks and not the government, to control the nodes to “mine” or whatever equivalent this currency has. Maybe it should just be the government since you would likely just end up with such a company beholden to the banks.
admax88qqq 5y ago
Japan is still very cash based.
makeitdouble 5y ago
When buying stuff online, either the credit card network temporarily foots the bill until the charge actually hits your bank, or your bank processes the transaction directly and money moves away by a bank to bank call. It needs to ne synchronous and connected. With this new system I’d assume you transfer ownership of your money but it doesn’t need to have both banks connect directly, and there might be a chance to have it work offline as well.
- spullara 5y ago
  So, debit cards?
  - AlexanderDhoore 5y ago
    HYPE-based debit cards!
  - nomdep 5y ago
    No, digital cash
    - dgfitz 5y ago
      As far as I’m concerned 99% of my money is already digital cash. Unless I go through the effort of taking cash out via ATM/bank or at a grocery story etc, all I ever see are numbers in a browser/app get bigger or smaller. How is this different? It precludes me from __ever__ having a tangible form of currency?
      - makeitdouble 5y ago
        You are putting too much meaning on the “digital” (yes, I know, it’s a name but). The point is not the digitalness but the decentralized part. One of the main participant in this system is railroads, and they already introduced a money equivalent offline system (Suica/Pasmo) that is wildly used in lieu of cash. As worded in the article they want to take it a step further and convert their “points” to actual legal tender.
Lazare 5y ago
Yes. In the US context, we already have a digital currency, they're called "US dollars". Something that gets floated periodically is the idea of creating a bank that only accepts deposits, and then sticks them in the Federal Reserve. This is sometimes called "narrow banking", and one of the more prominent efforts to do this involved a proposed bank called The Narrow Bank or TNB. (Alternatively, you could let individuals deposit money directly with the Fed.) If implemented, such accounts would be 100% backed. You have a dollar, you put it in the account, it sits there until you ask for it back. There's an article here: https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/narrow-bank-challenges-traditional-industry-model-but-fed-pushes-back-49204495 https://www.spglobal.com/marketintelligence/en/news-insights... As it noted, US regulators seem strongly opposed, at least for now.
- elif 5y ago
  It would be more accurate to call it "visa dollars" as transactions are only possible at the discretion of visa and by paying visa a fee. A better example would be in new zealand they truly have digital "NZ dollars" because anyone can transfer them to anyone for no fee.
anm89 5y ago
It's a good question. Those are second order digital money. They are not actual assets or liabilities on the central bank balance sheet. They are digital ious on a bank's balance sheet. The difference here is that the asset and liability are moved directly onto the central bank balance sheet. The reason this matters is because CBDCs are fundamentally about creating a hybrid fiscal /monetary policy tool that the central bank can use and allowing the central bank to digitally alter the balance sheet in a way that affects retail customers is the only thing that enables that. As a side note, there is nothing which intrinsically ties these to crypto or block chain. You could implement this without either of those concepts.

by m3kw9 5y ago

rich_sasha 5y ago

Central bank digital money normally means normal bank account but held directly with the central bank

deleted 5y ago

[deleted]

Kaytaro 5y ago

Yes, the only difference is this currency will be on a blockchain. Although I'm assuming it will be completely centralized so I'm not sure what benefits this will have over a traditional database.

gogopuppygogo 5y ago
Gives government more ability to track flow of capital. Hugely awful move for the world to give government more control.
mistrial9 5y ago
Eliminate or substantially reduce third-party transaction guarantee fees, and at the same time, one-hundred percent of the transactions are digitally recorded. A preponderance of big finance relies on trusted third-parties to intermediate transactions. Those third parties charge non-negligible fees to execute each and every transaction. Large value transactions can be done between untrusting parties directly, due to rigid cryptographic signing of the transaction record.
- rlpb 5y ago
  None of these features require a blockchain and can be done trivially by a central authority issuing append-only cryptographically signed ledger entries. > Large value transactions can be done between untrusting parties directly... What's the benefit of this when the bank has to accept a cleared record for a party to withdraw funds anyway?
  - mistrial9 5y ago
    > None of these features require a blockchain and can be done trivially what can be done and what is done -- different. You might want to tell those companies that charge a fee to guarantee the transaction, that they can just trivially stop doing that now.
  - rattlesnakedave 5y ago
    >None of these features require a blockchain and can be done trivially by a central authority issuing append-only cryptographically signed ledger entries. Why would you want to depend on a central authority when you can have a network of trusted blockchain users all signing and broadcasting their transactions to each-other in real time, without an intermediary? Why hamstring yourself with a database and the upgradability woes therein, when you can use a blockchain? >What's the benefit of this when the bank has to accept a cleared record for a party to withdraw funds anyway? With a permissioned blockchain, the funds can be cleared much faster (instantly?) than in the current system. I left another comment about this. These technologies are very powerful and not thoroughly explored in a permissioned context for use by traditional finance.
    - rlpb 5y ago
      > Why would you want to depend on a central authority when you can have a network of trusted blockchain users all signing and broadcasting their transactions to each-other in real time, without an intermediary? You're already depending on a central authority to back your funds. So forcing a blockchain into the mix just introduces that additional complexity and risk, not a new dependency on a central authority. > Why hamstring yourself with a database and the upgradability woes therein, when you can use a blockchain? You're conflating "blockchain" with "distributed database". For example, a trivial example is a git repository storing ledger entries. It's distributed, can be used in an append-only fashion (and enforced at a higher layer), and such a system probably doesn't have the "upgradability woes" you're worried about. It's not a blockchain. > With a permissioned blockchain, the funds can be cleared much faster (instantly?) than in the current system. This can also be arranged without a blockchain.

ne0flex 5y ago

Basically it means that you'll have a bank account directly with the government. They'll be able to monitor every transaction you make from that account and block transactions on your account. It'll also give the government the ability to add conditions to your money (ie. you need to spend X amount of yen / dollars this month or your money will expire and you'll lose it), or your money can only be spent at approved stores.

cortesoft 5y ago
The government can do way worse than add conditions to your money. They can arrest you and put you in jail. They can already take all your money. They can take it no matter what form you put it n in.
- roywiggins 5y ago
  Yes, one day India invalidated just about all their physical bills. https://www.bbc.com/news/world-asia-india-37974423 https://www.bbc.com/news/world-asia-india-37974423
- chii 5y ago
  > They can take it no matter what form you put it n in. tell that to criminals and money launderers!
hogFeast 5y ago
This is specifically not what this is. Banks in Japan have a central role in the economy so the govt has no wish to remove the ability of banks to create money (they are also have a lot of political power). The digital currency will be backed by bank deposits, and the aim of this appears to be creating a interbank payments system that can run with lower costs.
ac29 5y ago
The article says this is being run by a group of banks and other businesses, not the government.
- 5y ago

323 5y ago

When people say "digital money" they mean being able to for example move it from one account to another with a few lines of Python code, like you can with Bitcoin/Ethereum/Tether. You can't really do that with USD, you need an intermediary like Stripe, an attached bank account, ...

cortesoft 5y ago
Yeah, but this new system will still have a middleman, the bank...
- 323 5y ago
  Not necessarily a middleman. The banks will back the digital coin, but might not be much involved in transfers (we'll see). A bit like physical cash, it is backed by the gov, but you don't need to involve the gov to transfer it.
  - edgyquant 5y ago
    I wonder if it would be ideal for a separate company, not the banks and not the government, to control the nodes to “mine” or whatever equivalent this currency has. Maybe it should just be the government since you would likely just end up with such a company beholden to the banks.

admax88qqq 5y ago

Japan is still very cash based.

makeitdouble 5y ago

When buying stuff online, either the credit card network temporarily foots the bill until the charge actually hits your bank, or your bank processes the transaction directly and money moves away by a bank to bank call. It needs to ne synchronous and connected. With this new system I’d assume you transfer ownership of your money but it doesn’t need to have both banks connect directly, and there might be a chance to have it work offline as well.

spullara 5y ago
So, debit cards?
- AlexanderDhoore 5y ago
  HYPE-based debit cards!
- nomdep 5y ago
  No, digital cash
  - dgfitz 5y ago
    As far as I’m concerned 99% of my money is already digital cash. Unless I go through the effort of taking cash out via ATM/bank or at a grocery story etc, all I ever see are numbers in a browser/app get bigger or smaller. How is this different? It precludes me from __ever__ having a tangible form of currency?
    - makeitdouble 5y ago
      You are putting too much meaning on the “digital” (yes, I know, it’s a name but). The point is not the digitalness but the decentralized part. One of the main participant in this system is railroads, and they already introduced a money equivalent offline system (Suica/Pasmo) that is wildly used in lieu of cash. As worded in the article they want to take it a step further and convert their “points” to actual legal tender.

Lazare 5y ago

Yes. In the US context, we already have a digital currency, they're called "US dollars". Something that gets floated periodically is the idea of creating a bank that only accepts deposits, and then sticks them in the Federal Reserve. This is sometimes called "narrow banking", and one of the more prominent efforts to do this involved a proposed bank called The Narrow Bank or TNB. (Alternatively, you could let individuals deposit money directly with the Fed.) If implemented, such accounts would be 100% backed. You have a dollar, you put it in the account, it sits there until you ask for it back. There's an article here: https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/narrow-bank-challenges-traditional-industry-model-but-fed-pushes-back-49204495 https://www.spglobal.com/marketintelligence/en/news-insights... As it noted, US regulators seem strongly opposed, at least for now.

elif 5y ago
It would be more accurate to call it "visa dollars" as transactions are only possible at the discretion of visa and by paying visa a fee. A better example would be in new zealand they truly have digital "NZ dollars" because anyone can transfer them to anyone for no fee.

anm89 5y ago

It's a good question. Those are second order digital money. They are not actual assets or liabilities on the central bank balance sheet. They are digital ious on a bank's balance sheet. The difference here is that the asset and liability are moved directly onto the central bank balance sheet. The reason this matters is because CBDCs are fundamentally about creating a hybrid fiscal /monetary policy tool that the central bank can use and allowing the central bank to digitally alter the balance sheet in a way that affects retail customers is the only thing that enables that. As a side note, there is nothing which intrinsically ties these to crypto or block chain. You could implement this without either of those concepts.