6 ms·

I'm trying to figure out the why, and the ones in the article do not make a lot of sense to me. Dollars in things like Venmo are already digital currency. I ha

I'm trying to figure out the why, and the ones in the article do not make a lot of sense to me. Dollars in things like Venmo are already digital currency. I have some balance and I can send that balance to various places. How will this actually help under banked people? Would the people who don't have a back account today want to use digital cash? Fees are big issue, but they are for most part baked in and keep many people employed. It seems it would very difficult to make a policy change that would harm visa and Mastercard. Offline transactions are very unlikely to happen as well, people will double spend if transactions work offline. They only leaves surveillance as the goal. Being able to track cash transactions that works otherwise be untraceable.

Barrin92 5y ago
>I'm trying to figure out the why, because it disintermediates the entire payment sector, and every single dollar going into the pockets of banks /payment processors is going to go to consumers, or be returned to the public. It'll help underbanked people because by virtue of being a US citizen, or whatever jurisdiction we're talking about, you'll have free access to a costless payment system. It'd also unify and standardize payments across an entire currency zone, getting rid of the bazillion API / interface issues that the currently glued together system has. The benefits are pretty obvious. As to employment, if we're going to create employment through bullshit jobs we might as well set up a toll booth every ten meters until there's no unemployment or have people roll stones up and down mountains.
- erentz 5y ago
  If you just want one government owned and operated payment system what does that have to do with having a CBDC?
  - Barrin92 5y ago
    that's literally what the CBDC is for, creating a public payment system. Just like you walk into a store and pay with dollars, you can whip out your phone and pay with e-dollars. The practical effect is that it'd replace the for-profit payment industry.
- walkerbrown 5y ago
  > disintermediates the entire payment sector Unfortunately, the recent proposal specifically reassures commercial banks that any US CBDC will be intermediated (right on page 2) [1]. Board of Governors can't risk jeopardizing their speaking fees. Individual FedAccounts via USPS locations is the way to go for the underbanked [2]. But, disappointingly, this is not that. [1] https://www.federalreserve.gov/publications/files/money-and-payments-20220120.pdf https://www.federalreserve.gov/publications/files/money-and-... [2] https://dx.doi.org/10.2139/ssrn.3192162 https://dx.doi.org/10.2139/ssrn.3192162
- fauigerzigerk 5y ago
  >every single dollar going into the pockets of banks /payment processors is going to go to consumers, or be returned to the public. I doubt that. It would cut some costs and profit margins, but it wouldn’t be free to run the new system either. Someone needs to run the infrastructure, provide customer support, resolve conflicts, fight fraud, create apps and integrations, etc. It seems unlikely that central banks will do all of it themselves. The payment processing industry won’t go away, but the system will be simpler and they will have some welcome competition in some areas, which should depress the fees in high fee countries such as the US. In Europe it wouldn’t change much in terms of cost I think.
erentz 5y ago
I haven’t seen any good arguments for it that couldn’t be done in more mundane ways. Want to make banking easier? Regulate free accounts or set up postal banking. Want instant transfers? Other countries have had that for decades. So on so forth. Really most of this is a solution looking for a problem, but unfortunately it comes with a lot of baggage around privacy and controlling what you can do with your money that people wave away.
- judge2020 5y ago
  Re instant transfers: https://www.frbservices.org/financial-services/fednow https://www.frbservices.org/financial-services/fednow
- _xnmw 5y ago
  What is easier: getting 20,000 banks in the US to adopt a new protocol, or issue a new central government USD app? In theory yes, regulation could enable easier banking and faster transfers, and this has been tried with SEPA in the EU -- still far from being a truly instant transfer system. In practice, it would be much faster and more efficient for the central government to do this themselves. Part of the reason this whole crypto craze happened is because banks are incredibly slow to innovate, and there is STILL no way to transfer money internationally instantly. As for "privacy" and "controlling what you can do with your money", Visa and Mastercard have pretty much full control over that now anyway, unless you're dealing with pure paper cash, which almost no one does anymore.
  - georgyo 5y ago
    What's easier making a policy that 20,000 banks have to abide by. Or creating a new digital currency that 20,000 banks AND every business has to figure out how to accept? You hand waved away "creating an app", but that app has development and design decisions that need to last, needs to get adopted by people, and needs to be accepted. A free banking policy is significantly easier and would cost the government less.
    - _xnmw 5y ago
Laforet 5y ago
Cash is already heavily monitored and most petty criminals have already moved on to Amazon gift cards. The latter is easier to track in theory but nobody bothers. At the risk of sounding conspiratorial, I think this is part of an overarching move to slowly phase out physical cash co we could have practical negative interest rate one day. Otherwise it is not actionable as long as people could literally stockpile money under their mattress.
- gizmo686 5y ago
  I don't think people would do this at scale, even today. Suppose I have $30,000 that I want to keep cash (either physical, or a bank account). If I were to keep this at home, I would want to insure it. I can't find what this insurance would cost [0], but jewlery insurance seems fairly comparable, and comes in at about 1-2%. This means that a negative interest of at least -1% is still cheaper than insuring the cash under my matress. Add to this the general convenience factor, and some distrust of insurance companies, and they could push the rate even lower than that. While there are plenty of individual households that would probably make the decision to store money under their mattresses in a negative interest rate environment, those households are not where most of the cash is. In general as an entity (be it individuals or bussinesses) have more money, they become increasingly aware of the costs of having many. A convenience store that has security cameras fixed on the cash registers; reguarly has a manager cycle cash from the registers to a safe, and hires an armored car to transport cash to the bank is well aware that keeping cash as physical cash is not free. It is nice if the bank pays you to keep your cash in a bank account; but if the bank decides that you need to pay a reasonable them to keep your money safe; that is a price that most people (when weighted by the amount of money they are handling) would be willing to pay. The threat of storing money as physical cash still puts a lower bound on how low interest rates could go; but that is far below 0% In practical terms, I suspect it would be politically untenable to expose negative interest rates to individual savings accounts, but even a "small" subsidy allowing individuals to maintain personal savings accounts up to, say, $250k would still maintain most of the economic goals of a negative interest rate without the political backlash. [0] Not that cash insurance isn't a thing, but you need to submit actual information to get a quote from anyone.
- jbay808 5y ago
_xnmw 5y ago
> Dollars in things like Venmo are already digital currency. Yes, but I would prefer to NOT use a private network like Venmo if possible. For one, if it was government-issued with government benefits, everyone would have it, not just tech savvy people. Most Americans don't have Venmo, but almost everyone has some form of government ID (or would get one if they could receive some benefit).
- bobthepanda 5y ago
  Also, the bar for barring someone from use of a public system is much, much higher than the same for a private one.
- ralph84 5y ago
  Most Americans may not have Venmo, but certainly all Americans have ways to send money to each other. What problem are you really hoping to solve with government Venmo?
  - _xnmw 5y ago
    The ability to send money to any American, instantly, with zero or minimal fees, without having to load my money into a private network like Venmo. Gee, whiz.

Barrin92 5y ago

>I'm trying to figure out the why, because it disintermediates the entire payment sector, and every single dollar going into the pockets of banks /payment processors is going to go to consumers, or be returned to the public. It'll help underbanked people because by virtue of being a US citizen, or whatever jurisdiction we're talking about, you'll have free access to a costless payment system. It'd also unify and standardize payments across an entire currency zone, getting rid of the bazillion API / interface issues that the currently glued together system has. The benefits are pretty obvious. As to employment, if we're going to create employment through bullshit jobs we might as well set up a toll booth every ten meters until there's no unemployment or have people roll stones up and down mountains.

erentz 5y ago
If you just want one government owned and operated payment system what does that have to do with having a CBDC?
- Barrin92 5y ago
  that's literally what the CBDC is for, creating a public payment system. Just like you walk into a store and pay with dollars, you can whip out your phone and pay with e-dollars. The practical effect is that it'd replace the for-profit payment industry.
walkerbrown 5y ago
> disintermediates the entire payment sector Unfortunately, the recent proposal specifically reassures commercial banks that any US CBDC will be intermediated (right on page 2) [1]. Board of Governors can't risk jeopardizing their speaking fees. Individual FedAccounts via USPS locations is the way to go for the underbanked [2]. But, disappointingly, this is not that. [1] https://www.federalreserve.gov/publications/files/money-and-payments-20220120.pdf https://www.federalreserve.gov/publications/files/money-and-... [2] https://dx.doi.org/10.2139/ssrn.3192162 https://dx.doi.org/10.2139/ssrn.3192162
fauigerzigerk 5y ago
>every single dollar going into the pockets of banks /payment processors is going to go to consumers, or be returned to the public. I doubt that. It would cut some costs and profit margins, but it wouldn’t be free to run the new system either. Someone needs to run the infrastructure, provide customer support, resolve conflicts, fight fraud, create apps and integrations, etc. It seems unlikely that central banks will do all of it themselves. The payment processing industry won’t go away, but the system will be simpler and they will have some welcome competition in some areas, which should depress the fees in high fee countries such as the US. In Europe it wouldn’t change much in terms of cost I think.

erentz 5y ago

I haven’t seen any good arguments for it that couldn’t be done in more mundane ways. Want to make banking easier? Regulate free accounts or set up postal banking. Want instant transfers? Other countries have had that for decades. So on so forth. Really most of this is a solution looking for a problem, but unfortunately it comes with a lot of baggage around privacy and controlling what you can do with your money that people wave away.

judge2020 5y ago
Re instant transfers: https://www.frbservices.org/financial-services/fednow https://www.frbservices.org/financial-services/fednow
_xnmw 5y ago
What is easier: getting 20,000 banks in the US to adopt a new protocol, or issue a new central government USD app? In theory yes, regulation could enable easier banking and faster transfers, and this has been tried with SEPA in the EU -- still far from being a truly instant transfer system. In practice, it would be much faster and more efficient for the central government to do this themselves. Part of the reason this whole crypto craze happened is because banks are incredibly slow to innovate, and there is STILL no way to transfer money internationally instantly. As for "privacy" and "controlling what you can do with your money", Visa and Mastercard have pretty much full control over that now anyway, unless you're dealing with pure paper cash, which almost no one does anymore.
- georgyo 5y ago
  What's easier making a policy that 20,000 banks have to abide by. Or creating a new digital currency that 20,000 banks AND every business has to figure out how to accept? You hand waved away "creating an app", but that app has development and design decisions that need to last, needs to get adopted by people, and needs to be accepted. A free banking policy is significantly easier and would cost the government less.
  - _xnmw 5y ago

Laforet 5y ago

Cash is already heavily monitored and most petty criminals have already moved on to Amazon gift cards. The latter is easier to track in theory but nobody bothers. At the risk of sounding conspiratorial, I think this is part of an overarching move to slowly phase out physical cash co we could have practical negative interest rate one day. Otherwise it is not actionable as long as people could literally stockpile money under their mattress.

gizmo686 5y ago
I don't think people would do this at scale, even today. Suppose I have $30,000 that I want to keep cash (either physical, or a bank account). If I were to keep this at home, I would want to insure it. I can't find what this insurance would cost [0], but jewlery insurance seems fairly comparable, and comes in at about 1-2%. This means that a negative interest of at least -1% is still cheaper than insuring the cash under my matress. Add to this the general convenience factor, and some distrust of insurance companies, and they could push the rate even lower than that. While there are plenty of individual households that would probably make the decision to store money under their mattresses in a negative interest rate environment, those households are not where most of the cash is. In general as an entity (be it individuals or bussinesses) have more money, they become increasingly aware of the costs of having many. A convenience store that has security cameras fixed on the cash registers; reguarly has a manager cycle cash from the registers to a safe, and hires an armored car to transport cash to the bank is well aware that keeping cash as physical cash is not free. It is nice if the bank pays you to keep your cash in a bank account; but if the bank decides that you need to pay a reasonable them to keep your money safe; that is a price that most people (when weighted by the amount of money they are handling) would be willing to pay. The threat of storing money as physical cash still puts a lower bound on how low interest rates could go; but that is far below 0% In practical terms, I suspect it would be politically untenable to expose negative interest rates to individual savings accounts, but even a "small" subsidy allowing individuals to maintain personal savings accounts up to, say, $250k would still maintain most of the economic goals of a negative interest rate without the political backlash. [0] Not that cash insurance isn't a thing, but you need to submit actual information to get a quote from anyone.
jbay808 5y ago

_xnmw 5y ago

> Dollars in things like Venmo are already digital currency. Yes, but I would prefer to NOT use a private network like Venmo if possible. For one, if it was government-issued with government benefits, everyone would have it, not just tech savvy people. Most Americans don't have Venmo, but almost everyone has some form of government ID (or would get one if they could receive some benefit).

bobthepanda 5y ago
Also, the bar for barring someone from use of a public system is much, much higher than the same for a private one.
ralph84 5y ago
Most Americans may not have Venmo, but certainly all Americans have ways to send money to each other. What problem are you really hoping to solve with government Venmo?
- _xnmw 5y ago
  The ability to send money to any American, instantly, with zero or minimal fees, without having to load my money into a private network like Venmo. Gee, whiz.