[HN Gopher] Bank of England to explore a potential Central Bank ...
___________________________________________________________________
Bank of England to explore a potential Central Bank Digital
Currency
Author : tyho
Score : 204 points
Date : 2021-04-19 09:36 UTC (13 hours ago)
(HTM) web link (www.bankofengland.co.uk)
(TXT) w3m dump (www.bankofengland.co.uk)
| lottin wrote:
| Not sure if direct electronic payments without intermediaries are
| all that useful. How are disputes going to be dealt with?
| olalonde wrote:
| Same as with cash payments or bank transfers today.
| bun_at_work wrote:
| What? The bank is the intermediary, right?
|
| For cash payments, is there good dispute handling? It's
| terrible, right? And most people who are robbed of their cash
| don't get it back, right?
| MrMan wrote:
| might makes right
| cblconfederate wrote:
| Central banks are going fintech. Now the global currency wars can
| begin
| sgt101 wrote:
| Well - they began in about 1914 when the UK got out of the gold
| standard. Very good essay by Adam Tooze about the recent shots
| fired.
|
| https://foreignpolicy.com/2021/04/01/janet-yellen-mario-drag...
| the-dude wrote:
| Thank you, enjoyed the read very much.
| danlugo92 wrote:
| Paywalled.
| the-dude wrote:
| A taskforce is being created. That's all folks.
| faffe wrote:
| Indeed, you well sum up the article
| ur-whale wrote:
| Design by committee, what could possibly go wrong.
| corobo wrote:
| In fairness Bitcoin wasn't designed by committee and it's up
| there with CFCs in how much of a detriment it is to the
| environment
| StavrosK wrote:
| Bitcoin uses energy. Energy is a detriment to the
| environment, but it doesn't have to be.
|
| The problem isn't the energy usage, the problem is that
| we're bad at generating energy without killing the planet.
| corobo wrote:
| Ok so turn the safe generators on then
|
| Until then I feel my point stands
| the-dude wrote:
| The planet will be fine. You are projecting.
| ClumsyPilot wrote:
| Governments cant just trust it to a single 'stable genious'
| and call it a day
| davidgerard wrote:
| But don't forget: one of the things it's going to do is look
| for a ... use case!
| waterglassFull wrote:
| We prefer the term "Do Group"
| gm3dmo wrote:
| We've seen this kind of technology in search of a problem before
| in the UK and specifically with cryptocurrency:
|
| http://www.open.ac.uk/research/news/blockchain-startup-calle...
|
| This was sold as: our bitcoin/govcoin solution will keep people
| from being evicted from their homes because banks take 3 days to
| pay. Which if you spent 15 minutes looking into you would find
| out it's a total nonsense.
| neilwilson wrote:
| Central bank currencies, at least in the U.K. where our payment
| system is near instant anyway, is little more than a retail bank
| account at the Bank of England.
|
| A game the Bank of England got out of back in 2008. (People who
| worked at the BOE used to have the perk of a BOE bank account
| with the fabled 10-xx-xx sort code)
|
| Funny how these things go in cycles.
| itsdsmurrell wrote:
| This is great... easier rails into hard money (crypto).
| NicoJuicy wrote:
| This just shows that blockchain is a good technology.
|
| But that bitcoin is just an implementation waiting to become
| obsolete.
| disruptalot wrote:
| I've been hearing this for 10 years straight.
|
| Thus far the only successful examples of Blockchain
| technology have been based on digital currencies and Bitcoin
| has done nothing but continue it's success.
|
| On the other hand, there is not one example of "Blockchain
| technology" put to work on anything that needed it.
| NicoJuicy wrote:
| We use blockchain at work ( not by me).
|
| It's not because you haven't seen it in public, that it
| isn't used.
|
| Also: https://www.fnality.org/home which the bank of
| england ( mentioned in the article) is a member of to
| settle between banks.
|
| I also wouldn't see bitcoin as a success. No one that i
| know of uses it in daily life ( except some being hyped by
| it and HODL'ing it)
| disruptalot wrote:
| "Blockchain" is close to useless unless it is coupled
| with being public, permissionless, borderless among other
| things. The companies that jumped on this "Blockchain"
| "DLT" nonsense bandwagon to this day do not understand
| any of the fundamentals. Just using a distributed ledger
| does not provide any benefits that they try to borrow
| from likes of Bitcoin. Distributed ledgers have existed
| for decades.
|
| Anyone that holds bitcoin is using it everyday as a store
| of value. It's unnecessary to go into all the reasons
| Bitcoin makes sense in this thread, plenty of resource
| out there. Suffice to say that by any measure, market
| determined or otherwise, Bitcoin's usage has constantly
| (or even exponentially) increased since inception. Either
| this hoard of people are getting more and more wrong
| every year, or perhaps you're looking at it from the
| wrong angle.
| casi18 wrote:
| I now barely use my bank account, i get paid in dai, i pay
| others in dai. occasionally i have to move dai into fiat
| for bills. hopefully these central bank digital currencies
| help bridge that last step.
|
| i love it because i can write programs to move my money
| around. I can stream payments with https://sablier.finance
| i can lend and borrow with https://aave.com I get paid
| universal basic income each hour from
| https://www.proofofhumanity.id I use https://yearn.finance/
| and https://app.pooltogether.com/ as my savings accounts.
|
| I can take a loan against my collateral with
| https://alchemix.fi/ to buy things irl. I have a
| https://monolith.xyz/ visa card to pay for things with my
| crypto (until bridges arrive).
|
| I can organise with others in https://app.daohaus.club/ and
| vote in https://snapshot.org/
|
| At what point have we satisfied your criteria for making
| something useful and successful? I use it everyday, it
| works great for me.
|
| (all of the above is just a small set of projects on
| ethereum)
| disruptalot wrote:
| I should clarify, Ethereum isn't merely "Blockchain
| technology", it's a more programmable Bitcoin (with other
| trade offs of course). In that sense, it's useful for the
| reasons you mentioned. The point applies more to projects
| that think they can replicate some form of this success
| by just hashing a block and stringing them together.
| ObserverNeutral wrote:
| This stuff doesn't scale.
|
| The 99% is represented by the regular normie citizen who
| likes intermediaries because they don't want the
| responsibility.
|
| The legacy financial system with intermediaries didn't
| emerge from some evil dictators pushing it onto the
| world.
|
| It spurred from the market desires, and the market is
| made up of the regular normie citizens AKA the 99%
|
| Despite what the headlines say, the 99% as a whole
| controls 99% of the total wealth and they dictate the
| rules
| casi18 wrote:
| Maybe it doesnt scale? lets try it. Maybe 99% of people
| dont want to use it? Cool, lets try it.
|
| We don't have to be 100% better, we have to be 0.1%
| better. I think that is absolutely in reach. I think that
| will be transformational for many. It will not bring us
| utopia, it might have bad side effects, hopefully the
| good outweighs the bad.
|
| And is this not spurred from market desires too? How do
| we know the difference between genuine forces of
| innovation and a temporary trend?
|
| I remember using the internet for the first time in the
| late 90s, it was slow and clunky and magical. We had
| twenty years of silicon valley startup culture, there was
| some fun there, but it is so tired. Crypto-communities
| are the most fun i've had on the internet in a long long
| time. And the DeFi/DAO/Ethereum stacks feel magical.
|
| Maybe i'm wrong and it is nothing in the long term, but
| maybe we dont have to assume the authority of the legacy
| system is legitimate. Maybe the feeling of liberation it
| brings with it, and the love in the community, will drive
| the space to continue to out-perform the markets, out-
| innovate the fintech startups, and out-last the legacy
| systems.
| ObserverNeutral wrote:
| I get what you say.
|
| But I think you are projecting yourself onto the regular
| citizen.
|
| The thing which up to now the crypto world has managed to
| capture about the regular citizen is its fear of
| inflation and strong preference for deflation which
| allows him to increase his net worth without doing any
| work, just by sheer deflationary force baked in the
| protocol.
|
| From a purely financial return standpoint: If
| DeFi/DAO/Eth is what the internet was back in the days,
| then it's IRC.
|
| IRC didn't make any money. Facebook which is the
| dictionary definition of tired and not fun...well it will
| smash the record as the fastest Company from 0 to 1T.
|
| So the equivalent to that would be betting on the Bank
| which decides to make Buterin the CEO or the maybe a new
| properly regulated fintech startup which wears the mantle
| of DeFi and the PR of Eth, but it's really an old school
| intermediary.
|
| I get what you are saying about fun, but fun and finances
| shouldn't be mixed, in my opinion. Because you'll never
| know what other people who are not yourself would
| consider fun and if they'd jump on board to legitimize
| the community and have the token/stock you invested in
| appreciate
| NicoJuicy wrote:
| A lot of jurisdictions if everything goes wrong:
|
| https://www.proofofhumanity.id/ - exists since 2021-01-20
| | whois unavailable | 1 Guy from Brazil on Github
|
| https://yearn.finance/ - exists since 2020 | Iceland
|
| https://sablier.finance - iceland
|
| https://app.pooltogether.com | canada
|
| https://alchemix.fi/ Charlestown? - France
|
| monolith.xyz | US
|
| No thanks. I'll keep everything through the bank in my
| country, which I can call everytime if something would be
| wrong.
| casi18 wrote:
| Those are mostly just front ends (expect monolith which
| is just for visa, not a long term thing), I can make/host
| my own front ends for the protocols if i want.
|
| e.g. the yearn dai vault address is
| 0x19D3364A399d251E894aC732651be8B0E4e85001 i can call the
| functions at that address via my own node with my own
| code if i want to.
|
| It isn't in a jurisdiction, no-one else is responsible
| for my money but me. That comes with risk sure, but it
| also comes with liberty. They are decentralized
| applications and I can always opt out and move somewhere
| else. I can take their code for their financial
| application, fork it and re-deploy my own version under
| my central control if i wanted too. Imagine forking a
| HSBC savings account. It is wild and crazy. Some people
| don't like that. I love it.
|
| You can feel free to do as you like. A lot of the
| interest in crypto is that if these tools allow people to
| coordinate and communicate more effectively than the old
| tools, then they will come to replace them. If it works
| as we imagine then you may end up using it and not even
| knowing.
| NicoJuicy wrote:
| But you're using all sort of things which i already have
| access to.
|
| I wouldn't want all my money on a platform with "risks",
| for something i already have.
|
| Could be fun, doesn't make it useful though.
| astoor wrote:
| _> This just shows that blockchain is a good technology._
|
| At no point does the original article mention blockchain,
| which actually improves its credibility given a _Central_
| Bank Digital Currency would not benefit from a public
| blockchain (as distinct from a permissioned distributed
| ledger).
| NicoJuicy wrote:
| Explore digital currencies is highly likely to be
| blockchain
|
| > Meanwhile, the Bank of England also announced a new
| omnibus bank account, a special account at the central bank
| targeted at regulated payment systems. The new account is
| well-suited to Fnality, the blockchain-based payment system
| owned by 15 institutions.
|
| And they ( bank of England) already have blockchain tech to
| settle between banks : https://www.fnality.org/home
| Nursie wrote:
| Just no.
|
| Hard money is not desirable. Whatever comes out of this "the
| country's money supply should be determined by some cryptobros"
| is not going to be the result.
| casi18 wrote:
| I get the "anti-crypto-bro" sentiments, but Ive trusted the
| FOSS/linux communities for long enough to have open and
| auditable tech and clear decision making, it might not be
| perfect but it is a lot more transparent than my government.
|
| I'd pick the crypto-communities and thousands of people
| gaming them to design better mechanisms for the everyday
| people to use, than a few politicians and the banks that are
| bribing them.
| RichEO wrote:
| I think you might be over estimating the overlap between
| the FOSS/Linux community and the crytobro community - at
| least as it exists in 2021
| casi18 wrote:
| I think HN repeatedly underestimates the overlap of these
| communities. FOSS ideology is critical in pretty much all
| crypto/defi projects.I can probably pick any dev in the
| space and they'll most likely be running linux.
|
| HN refuses to change its collective position it settled
| on a decade ago. It seems people here got stuck on some
| abstract projections of "crypto-capitalism-cruelty" and
| refuse to admit there might be something interesting
| going on.
|
| Where did the "move fast and break things" people, the
| "disrupt the institutions" people, and the hackers go?
| crypto.
|
| Or should we only be working on sass startups to reformat
| pdfs. is that what we're allowed to work on? everything
| else is a moral sin?
|
| Utterly Bizarre.
| arberx wrote:
| Preach!
| Nursie wrote:
| The problem with that is that there doesn't seem to be
| anything interesting going on, beyond speculative hyper-
| capitalism. All the problems crypto was going to solve
| were illusory, or crypto was not a useful tool in solving
| them. Instead we've had years and years of hype and
| bubbles and solution-looking-for-a-problem but nothing
| much of any practical value.
|
| "Move fast and break things" now has a bad rap too in
| much of society - it turns out not everyone wants their
| things broken, and some of that stuff was useful. The
| world is not as in-love with the output of Silicon Valley
| startups as it used to be, having seen some of them play
| out.
| matheusmoreira wrote:
| Monero is very close to the original cryptocurrency
| dream. Private, anonymous, fast transactions, low fees,
| mineable by CPUs, can be and actually is used as a
| currency.
| bitcoinmonger wrote:
| Agreed. The money supply should be flexible to help alleviate
| the effects of inevitable financial crashes.
|
| This of course devalues the savings of the average person
| when this happens, but it's the only way to recover from
| mistakes like the mortgage bubble.
| razius wrote:
| Mortgage bubbles don't appear out of thin air, it's a debt
| bubble. Why does a saver have to pay for debtors?
| Nursie wrote:
| Better than a system in which there are no tools to deal
| with such problems, and in which monetary supply causes a
| constraint on the economy, rewarding those who simply hold
| the currency rather than the productive or investors.
| dools wrote:
| Inflation is almost never caused by government spending.
| It's caused by regulatory policy that allows, for example,
| bubbles in real estate or by external shocks like oil and
| so on. The whole "fiscal policy will debase the currency"
| thing is blown way out of proportion. I should also point
| out that there are much better financial instruments than
| cash to hold long term savings and they're being made ever
| more accessible.
|
| The benefit of a government supplied digital currency is a
| payment system that isn't run for profit.
| ObserverNeutral wrote:
| > Agreed. The money supply should be flexible to help
| alleviate the effects of inevitable financial crashes.
|
| In reality, you either do it in secret...or it makes the
| crash even worse because people would be even more risk
| averse because they see the government using these non
| conventional tool...hence "it must be pretty bad, better
| save some more"
|
| QE is the quintessential example of this. The only American
| who benefitted from QE was Bernanke, so he got to be hailed
| as a hero and now everybody genuflects to him and uses his
| "playbook".
| laurencerowe wrote:
| > QE is the quintessential example of this. The only
| American who benefitted from QE was Bernanke, so he got
| to be hailed as a hero and now everybody genuflects to
| him and uses his "playbook".
|
| The US came out of the 2008 Great Recession much better
| than the Eurozone due to its ability to borrow cheaply as
| a result of QE. The Eurozone was hamstrung by the ECB's
| inability to act similarly and the 2012 agreement to
| allow the ECB to purchase "unlimited" amounts of bonds
| saved the currency.
| ObserverNeutral wrote:
| US went down more steeply and emerged faster than the EU,
| not because of QE, or all the fairy tales told by the
| Fed.
|
| The US as a country is more dynamic, younger and more
| risk prone than the Eurozone . That's about it. QE had
| nothing to do with anything.
|
| In turn the dynamism and risk proneness of the US is
| nothing compared to places like India, Pakistan of
| Nigeria.
|
| The EU is still a bit more risk prone than Japan but it's
| really close
|
| Japan is the most risk averse country on Earth and are
| stagnating since the 90s , no matter how much QE they do
| or how much they tinker with their unit of account.
| Economic growth requires entrepreneurial risk taking and
| consumer risk taking. Down there they don't even risk
| going to the bar and approach girls, they hardly have sex
| anymore. With this social landscape the entrepreneurial
| risk taking which is necessary to start a business and
| consumer risk taking necessary to max out a credit card
| for purchases...that's a pure mirage and tinkering with
| the unit of account or the plumbing won't save them, or
| anybody for that matter. Just serves as a way for
| Treasury secretary and the BoJ chair to keep his job and
| justify his social status because he is "doing something
| to fix the economy"
|
| Back to the GFC, the US went down more steeply and
| emerged faster the same way a dude in his 20s can do too
| much drugs, be wasted and out for a couple of hours and
| then go to work as nothing happened in the morning.
|
| The destiny of megasocial groups made up of 400M people
| are not decided by the few elected officials, it's the
| elected officials who find themselves in those spots
| because they enact the policies which are popular among
| the 400M people.
| ObserverNeutral wrote:
| Who asked for this and where is the proof-of-ask?
|
| Also how can we make money from this?
| kasperni wrote:
| More info here [1], and a background discussion paper her [2].
|
| [1] https://www.bankofengland.co.uk/research/digital-currencies
|
| [2]
| https://www.bankofengland.co.uk/-/media/boe/files/paper/2020...
| codeulike wrote:
| They should make it work on the 'old money' system of penny,
| shilling and pound, with twelve pence to a shilling and twenty
| shillings to the pound, then use the abbreviation 'd' for pence,
| and then throw in farthings (quarter penny) and half-crowns (two
| shillings and six pence) because if there's one thing I've learnt
| about finance, its that the more confusing things are, the easier
| it is to make a profit.
| Mauricebranagh wrote:
| I suspect some of there more out there "brexiteers" would like
| that - I have seen calls for returning to imperial units FFS!
| leg100 wrote:
| Don't forget the guinea: equal to a pound and a shilling, or 21
| shillings, for the purposes of bidding for a racehorse.
| tim333 wrote:
| Also the British Sovereign with a nominal value of a pound an
| an actual value of about PS320 judging by ebay https://www.eb
| ay.co.uk/sch/i.html?_from=R40&_trksid=p2334524...
| Mauricebranagh wrote:
| Because a Sov is actual currency you don't pay VAT and CGT
| doesn't apply.
| tim333 wrote:
| Cool.
| pjc50 wrote:
| I see the scams are out in force selling "gold (plated)
| sovereign".
| tim333 wrote:
| Not really a scam if they tell you it's plated. Now if
| they sell it as a real one that's bad.
| walrus01 wrote:
| Can I use this to buy a hogshead of ale?
| zelphirkalt wrote:
| While in general quite confusing, I cannot help but notice,
| that they used to use better divisible numbers like 12, to go
| to the next bigger unit.
|
| I also read that Babylonians or whoever it was, used a system
| with base 60, even better divisible.
|
| I wonder how it would affect our daily lives, if we still had
| such better divisible numbers in use with money today. For
| example 60 cent make a euro or dollar or whatever. Of course
| then it might not be called "cent" any longer.
|
| In essence, perhaps not all ideas of such an old system were
| bad in principle.
| marcus_holmes wrote:
| My parents grew up with the "old money", and my father in
| particular always said that it was easier to work with
| because everything divided by 2,3 or 4 easily. His opinion
| was always that the new money was introduced to make
| computerisation easier. In other words, the benefit wasn't
| for humans (who prefer working in 12's), but for computers.
| staticman2 wrote:
| Humans have 10 fingers and 10 toes. We almost certainly
| prefer working with 10s for that reason, all things being
| equal.
| chromatin wrote:
| Many ancient human cultures had base 12 and base 60
| number systems because there are 12 digit segments that
| can be indexed by pointing your thumb -- 3 segments/digit
| x 4 fingers
| nosianu wrote:
| That does not make sense to me, since computers "native"
| numbers are not binary and the layer on top would not care
| one bit if it converts the binary representation to
| whatever base. Not to mention that the wide-spread use of
| the decimal system among _humans_ happened long before
| computers where even dreamed of. So those things point to
| the decimal system adoption having been made for humans and
| not for computers.
|
| Countries other than the UK had done that step (for
| currency) centuries before Britain too.
|
| Here is some background: "How Britain converted to decimal
| currency" -- https://www.bbc.com/news/business-12346083
|
| Also,
|
| > _the benefit wasn 't for humans (who prefer working in
| 12's)_
|
| I'm not sure what people you know, I don't know anyone who
| would prefer base 12. That seems like a very bold claim to
| me - I think I would like to see some evidence for it.
| tim333 wrote:
| It's popular for time. See you in an an hour rather than
| in 0.041666 days.
| Majestic121 wrote:
| That's a bad example, because you use exactly one hour.
|
| If you divide the day in 10, let's call it decile, you
| would say see you in a decile instead of 2.43 hours.
|
| As a side effect, 2.43h is actually 2h and less than 30
| minutes and not 2h and 43 minutes (unintuitive), while
| 0.41 decile would probably be 41 centile, so conversion
| would be easier.
| marcus_holmes wrote:
| I have no evidence for any of it except the anecdotal
| mumblings of an old man ;) Though a lot of different
| societies came up with 12-based systems, so there might
| be something to it.
|
| It is clear that illiterate people could work in "old
| money" fine. I suspect this is like the darts players who
| can do the mental arithmetic involved in a darts match
| fine, but would consider themselves "bad at maths". It's
| a learning cliff, but like any learning cliff, it no
| longer matters once you've climbed it.
| oblio wrote:
| The problem is not a micro-optimization such as using base 10
| or base 12. The problem is that we can't all agree on a
| common measurement system and the biggest economy in the
| world stubbornly keeps using an archaic and sub-optimal
| system that it's actively pushing onto the rest of us.
|
| For example, instead of having screen details in sqcm (and
| aspect ratios), we have inches (and maaaaybe aspect rations
| mentioned somewhere). This is being pushed <<everywhere>>
| around the world because of freaking device screens.
|
| It's like a comment about I saw about nature: if we see a
| rodent eating a bug, that's a bit gross but it's ok (the
| rodent being a mammal and therefore closer to us, so
| "superior"), but if we saw a bug eating a rodent, we're
| appalled. Right now the US imperial measurement system seems
| like that bug trying to eat the rodent (metric/decimal
| system).
| veltas wrote:
| Historically, metric was the thing being pushed.
| oblio wrote:
| The "pushing" isn't the problem.
|
| The nature (good/bad) of the thing being pushed is. The
| imperial system is objectively inferior since the metric
| system has been created.
| jd842 wrote:
| It's inferior for some purposes. It's still ideally
| suited to the purposes for which it naturally evolved in
| the first place.
| Jenk wrote:
| > Of course then it might not be called "cent" any longer.
|
| Would probably be called a sextant, which would raise a few
| eyebrows in British politics if history is to go by.
| isolli wrote:
| My favorite theory explaining the emergence of base- 12 and
| 60 is counting on your fingers: count up to the 12 phalanges
| on one hand (using your thumb), then start over and keep
| track of dozens with the 5 fingers on the other hand.
| pjc50 wrote:
| The funniest thing I've seen on HN in quite a while. You could
| even monetise it by marketing to those people who are fans of
| pre-decimal currency for bizarre political reasons.
| mywittyname wrote:
| To be fair, a base-60 system has some value over a base-100
| system.
|
| That being said, a pound is so worthless today that the
| difference between 1/60th of a pound and 1/100th is
| meaningless; it would just be a rounding error in most
| calculations.
|
| I suspect that all fractions of a PS will go the way of the
| shilling in the next 30 years.
| pjc50 wrote:
| Still higher than the dollar? We lost a chunk against the
| Euro but not as much as I was expecting. The only thing the
| PS has really devalued against is housing.
| Cypher wrote:
| boomers chasing the next big thing
| globular-toast wrote:
| Government run digital money is the second best thing after
| decentralised digital money. Since the latter has not panned out
| as originally hoped, I support this second best approach.
| KaiserPro wrote:
| I've not really understood the need for a "digital" pound, the
| pound is pretty digital already.
|
| I can already have an entirely digital bank account from at least
| three "challenger" banks. There are also now at least two
| business accounts that also entirely virtual. "Faster Payments"
| (customer bank transfers) are delivered in seconds.
|
| I can see a need for speeding up BACS, and reducing the price of
| CHAPS, but apart from that, there isn't much wrong with the
| pound.
|
| changing to having an open ledger(bitcoin style) isn't entirely
| great as a normal citizen. I don't really want my entire
| financial history to be picked over by advertisers, insurance
| companies, future employers, and spam/scam bots.
|
| A government isn't ever going to allow a normal citizen to have a
| anonymous payments system so I don't see them allowing a purely
| private and anonymous currency (ala-monero)
| rvense wrote:
| Money is infrastructure, and the digitization of money has
| resulted in the privatization of that infrastructure. I don't
| think that was ever part of the plan, really, as far as the
| government goes.
| timelincoln wrote:
| its a good point but more interesting to consider the history
| of money as a private enterprise, aka fractional reserve
| banking and independence of the fed, -> private financiers of
| governments going back through the ages. Modern gov fiat has
| been the best form of money yet but is still backed by
| private 'lending' . Whats SUPER interesting is how the proof
| of work -> proof of stake models continue to provide a
| monetary system in which the money holders control the
| system, it seems for now an unavoidable component -> good
| incentives for value allocators
| [deleted]
| globular-toast wrote:
| Yes, it is digital, but it's minted by private banks, not the
| government. It's been a huge problem. Private banks cannot be
| trusted with our money supply as they have repeatedly shown.
| mytailorisrich wrote:
| Currency is not digital.
|
| What they mean by "digital currency" is a for instance a purely
| digital bank note than you can hold and transfer to someone
| else (like for instance a crypto token). Clearly that's not how
| things work now.
|
| Edit: See my further comment below as it looks like people
| don't quite understand what "digital currency" is.
| Broken_Hippo wrote:
| So, it'll do a thing I can already do with money?
| KaiserPro wrote:
| That's literally how the BoE works.
|
| when you do a bank transfer, do you think they physical cash?
|
| When the BoE does quantitative easing, they don't actually
| print money[1], they just "transfer" money to banks who then
| do "things" with it. Its literally just numbers in a DB.
|
| [1] handling physical cash is expensive, slow and difficult.
| Not only is the price of movement relatively static
| regardless of the value, you have to keep on paying to store
| the stuff. The Federal reserve do things differently I think,
| because are not quite as all in one as the BoE.
| mytailorisrich wrote:
| > _That 's literally how the BoE works_
|
| Not, it's not.
|
| It seems you and others are confused here and do not
| understand what is meant by "digital currency".
|
| Digital currencies, like what is discussed and e.g. the
| "digital yuan" in China, it to create real digital bank
| notes / coins. Not expert by I think similar to a crypto
| token.
|
| It means I can hold a digital bank note and pay you by
| transferring it to you.
|
| This is very different to the current system in which I
| instruct my bank to do something and to balance with the
| recipient's bank.
|
| Depending how this is implemented it can be anonymous like
| physical bank notes, or it can be tracked and plenty of
| other things also become possible. It also does not require
| me to interact with my bank.
| SideburnsOfDoom wrote:
| > It seems you and others are confused here and do not
| understand what is meant by "digital currency"
|
| You started of staying "currency is not digital", a broad
| statement about which I don't think there's any
| confusion, it's just flat-out incorrect. If it's not
| digital then what is it then, analogue?
|
| Now you're talking about a particular form of digital
| token, which OK, maybe currency isn't that, and the
| usefulness of that isn't given. Saying "currency isn't
| digital because it's not this token" is like saying ".png
| files aren't digital because they're not .mp3s". It's
| still numbers in computers. You know, digital.
| mytailorisrich wrote:
| Guys, please try to read about "digital currency" before
| writing snarky replies and downvoting.
|
| Currency is currently not digital in the sense meant
| here. Otherwise the BoE and other central banks would not
| discuss the possibility of issuing digital currency. It's
| rather the banks' ledgers and transfer instructions that
| are digital.
|
| In my previous comment I have only tried to explain what
| CBDC is. Perhaps I did not do a good job if so please
| feel free to provide a better explanation that would
| benefit everyone.
|
| > _" currency isn't digital because it's not this token_
|
| I have not written that, so I think you do not understand
| the topic. Here for reference to start with:
|
| https://en.wikipedia.org/wiki/Central_bank_digital_curren
| cy
| SideburnsOfDoom wrote:
| Your statement was "Currency is not digital." - digital,
| full stop. Which is a nonsense. The word "digital" is
| well-defined.
|
| It seems that you're now saying that "BoE Currency is not
| digital currency." with a specific meaning of "digital
| currency" separate from the definition of "digital" or
| "currency".
| iudqnolq wrote:
| > Currency is currently not digital in the sense meant
| here. Otherwise the BoE and other central banks would not
| discuss the possibility of issuing digital currency.
|
| The alternative is of course that it's all meaningless
| hype. Just because the government does something doesn't
| necessarily prove it makes sense.
| SideburnsOfDoom wrote:
| From a government point of view, a "Taskforce to
| coordinate the exploration of a potential ..." (quoting
| from the article) often makes sense, and doesn't
| necessarily result in anything much resembling action.
| See also "kicking it into the long grass".
| KaiserPro wrote:
| Sorry I had confused your statement to mean shipping
| physical currency about.
|
| your clarifications were helpful
| Broken_Hippo wrote:
| You say, "Real, digital bank notes" but really, they are
| just numbers that you can write down if you want. That
| number is worthless unless you do the digital transfer
| (ie telling bank/service to do something). Realistically,
| it is no different. I can do all of this stuff with a
| bank, and person to person transfers are easy where I'm
| at. You are still interacting with a company or
| government to move your money around - and doing the same
| if you are receiving money. It doesn't really matter that
| it isn't your bank, even if you hate your bank. You have
| to do this even if you pay cash for a piece of used
| furniture: Most employers do not pay in cash.
|
| The only real benefit to this system is that it would
| probably be run by a government agency and as such, would
| theoretically make it available to everyone. This would
| reduce the cost of being unbanked in the US and probably
| improve lives. Honestly, though, you could just make
| basic banking available for everyone so they can get
| paid, pay bills online, and shop easily - it'd likely
| prove to be more cost effective.
| mytailorisrich wrote:
| "Digital currency" is a wide term. At one extreme it can
| be a token that can be used anonymously and without the
| need for a bank in the same way coins and bank notes are
| today: As long as people are satisfied that they are
| genuine they are happy to accept them as payment.
|
| The point being is that what is referred to as "digital
| currency" is not what we have now (otherwise the BoE and
| others would not be studying feasibility and
| costs/benefits). In that sense currency is not digital at
| the moment. Bank ledgers and transfer instructions are.
| Trias11 wrote:
| Absolutely.
|
| Switching into their own digital currency (or watever
| technology) government picks doesn't automatically make them
| and their fiscal policy more trustworthy among businesses,
| investors or citizens.
|
| They can't hide abusive tax policies, irresponsible spending
| and desire to control their citizens wealth and financial lives
| behind their "digital" version of fiat.
| tumetab1 wrote:
| A good example why current currencies are not digital, like
| Bitcoin, is the settlement process of a public trade stock
| which takes 2 days because of the current financial system.
|
| A digital currency would make possible to settle a trade stock
| in minutes or even seconds.
|
| A digital currency would remove a lot of transactions costs
| associated with buying/selling stocks.
| betterunix2 wrote:
| Actually, no. Stock trading is settled over a period of two
| days only because of how the system is currently organized;
| it is technically possible to settle trades at the end of the
| day, or even in real time, and there are exchanges in the
| world that settle trades rapidly. The reason the US exchanges
| have not changed is inertia, and settlement periods have
| actually decreased just in my lifetime.
|
| One real reason why digital currencies are not widely
| deployed is crime. Already there is a growing problem of
| ransomware demanding Bitcoin payments; a "true" digital
| currency that was as convenient as Bitcoin and allowed
| offline (peer-to-peer) payments (which Bitcoin does not and
| cannot support) would enable "perfect crimes." This was a
| concern raised in the 90s when digital cash was being
| proposed:
|
| https://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.46.
| ..
|
| This was one of the concerns that prevented banks from
| adopting e-cash (as the term is understood by
| cryptographers), though I have been told by people who worked
| on this that law enforcement agencies were satisfied that
| they could still "follow the money" since the anonymity
| property was narrowly defined (banks could not link deposits
| to withdrawals, but banks would still know who had made a
| particular deposit, merchants would still be able to identify
| customers, etc.).
| misja111 wrote:
| The stock trade settlement time has little to do with the
| financial system, but more with how stock trading is
| organised.
|
| There are quite a few steps before actual stocks can change
| hands. For instance the seller could have sold without
| actually owning the stocks, it might be he even can't deliver
| them, in which case the clearing will have to take care of
| that, etc. All these steps could have been automated long ago
| if the will was there, the reason they haven't is not because
| of the currency used but because of traditional common
| practice and legacy reasons.
| Angostura wrote:
| > A government isn't ever going to allow a normal citizen to
| have a anonymous payments system so I don't see them allowing a
| purely private and anonymous currency (ala-monero)
|
| Actually, the UK got pretty close to it in the 1990s
|
| https://en.wikipedia.org/wiki/Mondex
| BitwiseFool wrote:
| I don't know much about UK politics, but the government over
| there seems to adore surveillance and has no qualms with
| recording as much information as they possibly can. I simply
| don't see them accepting the idea of an anonymous payments
| system.
| mywittyname wrote:
| They also have an economy built upon money laundering, tax
| avoidance, and other related activities. I've heard many
| people say that the real reason behind Brexit was to avoid
| new EU regulations being imposed on British banks.
| throw1234651234 wrote:
| Someone explained this to me last year with an example, and it
| 'clicked'. The idea is to let the government control the
| 'velocity of money'. For example, the US is giving out stimulus
| checks for COVID - the clear goal is to keep business afloat
| and people spending, but what if they just put the money into
| savings or crypto? The government did not achieve their goal.
|
| To achieve their goal, they program the money with "must be
| spent on consumer goods and/or rent in the next 6 months." Then
| they put a "smart contract" on the money and say "can only be
| spent if you are drug free and looked for a job in the last 6
| months."
|
| It's scary and I am against it, but above is the upside, from a
| certain perspective.
| ObserverNeutral wrote:
| Japan tried this in the 90s with expiring vouchers, results
| were subpar.
|
| The bailwick of Jersey sent citizens a prepaid card with
| PS100 expiring in 6 monhts which was also disabled for ATM
| withdrawls during 2020. Again moderate results.
|
| Money is a unit of account, if you mess with it people adjust
| quickly, there is no free lunch.
|
| It's not the same as giving Wellbutrin+Ritalin to somebody
| who is depressed.
| synnejye wrote:
| Then they must have be doing something wrong? Obviously
| people would not be foregoing free money if it was easy to
| get. You are arguing that people would not spend "free" 100
| usd on their rent if the money/voucher was directed towards
| rent.
| throw1234651234 wrote:
| I think the key to what ObserverNeutral is saying has a
| strong point - "People will try to sell their fake,
| expiring "crypto-dollars" for real money, instead of
| following the rules.
|
| Even if they can't see the "crypto-dollar" for less "real
| dollars", they will just go through some medium of
| exchange. I.e. buy toilet paper for crypto dollars, and
| sell it at a discount.
|
| Great point. I didn't consider it offhand.
| ObserverNeutral wrote:
| "How bad things must be if the government resorts to
| giving us free money with an expiration date to force us
| to spend? I'll spend my 100$ card before it expires but
| I'll save extra 200$ of my salary compared to before. I
| have to brace for the worst that it's yet to come, it's
| going to be really bad before it gets better, especially
| given that the Government is resorting to giving us free
| money "
|
| The more you use extreme measures to force people to do
| what they don't want, the more they'd refuse to do so.
|
| When people are scared and paralyzed by fear, messing
| with the unit of account won't calm their worries, if
| anything given how out of the ordinary it is, it could be
| argued that it makes things worse.
|
| Money is external, people pick the scheme apart rather
| quickly and you end up worse than before because now you
| look desperate to force them to do what you want
| samsonradu wrote:
| Right. Push this insanity too much and people will start
| bartering using gold/silver/crypto and such. Then the gov
| is forced to ban the use of assets and things get
| complicated.
|
| Whether this is good or bad on the long run is debate-
| able, but it would shake things up globally.
| SideburnsOfDoom wrote:
| > the pound is pretty digital already.
|
| What you didn't mention is that it's also already pretty
| digital at point of sale as well; Contactless payment, i.e.
| "card taps" are very common.
| swiley wrote:
| Can I have that? I'm not a briton (perhaps I'm even from a
| country you're at war with.)
|
| This is why digital replacements for cash hasn't (and likely
| won't) succeed.
| xwolfi wrote:
| A normal citizen is never gonna build a government that allows
| for anonymous payment systems.
|
| To often people speak of their government as completely
| abstract separated entity they can only submit to. But
| actually, they elect them and the government even follow them
| in their craziest follies, like, say, leaving the EU in the UK.
| thrwyoilarticle wrote:
| We don't elect the Bank of England. And while it's government
| as the US likes to use the word, it's not government as the
| UK likes to.
| KaiserPro wrote:
| > To often people speak of their government as completely
| abstract separated entity they can only submit to.
|
| it is a compromise. I don't want to live in anarchy (sorry, a
| libertarian world) because like extreme communism it has
| inherent flaws. Thus I submit to being ruled by the UK
| government, and actively vote in elections. However as its a
| compromise, no present party with a chance of winning power
| reflects my views, thus compromise.
|
| However to your main point. Anonymous easy payments are a
| vector for corruption, crime and general bad stuff. Sure
| there are good usecases for it, but mostly it'll be used to
| avoid tax.
| dools wrote:
| The important distinction is that currently all cashless
| payment systems are privately run for profit which is
| effectively a regressive transaction tax.
| captn3m0 wrote:
| So would switching it to a non-profit government body? NPCI
| (India's quasi-government retail payments infrastructure
| company) is a non-profit and they're looking to switch to a
| for-profit.
|
| It worked quite well, I'd say.
| insert_coin wrote:
| Yes, instead let's have a government payment system with
| funds expiration date.
| rvense wrote:
| It's also just a control thing. When private enterprises
| control (and create) money, they will do so based on their
| own interests. These might not align with the best interests
| of society at large.
| [deleted]
| yunesj wrote:
| Is it really your experience that the market fails to cater
| to the interests of the people, and politicians are
| uniquely capable of it?
|
| Politicians can't print a dollar without abusing it to
| promote religion ("In God We Trust"), funding war, or
| handing it out to get reelected.
| aww_dang wrote:
| Removing "payable to the bearer on demand" seems
| especially relevant.
| lainga wrote:
| Well, in Keynesian analysis, the private enterprises are
| supposed to create money. The gov't manages how much they
| create though reserve requirements.
| eruleman wrote:
| "As announced on March 15, 2020, the Board reduced
| reserve requirement ratios to zero percent effective
| March 26, 2020. "
|
| https://www.federalreserve.gov/monetarypolicy/reservereq.
| htm
| KaiserPro wrote:
| I understand your point and sympathise, but Handling cash
| isn't free. yes, for small traders and personal use, cash is
| effectively free. but as soon as you start to put it into the
| bank, it incurs a cost.
|
| Depending on where you are, this cost might be hidden from
| you. (banking in the USA for example is expensive compared to
| the UK)
|
| However as you point out, those companies that provide PoS
| terminals take either a monthly fee, or a percentage cut.
| rvense wrote:
| > I understand your point and sympathise, but Handling cash
| isn't free.
|
| Neither are roads, railways, wastewater treatment,
| communication lines or electricity. Money is
| infrastructure, and it makes sense for government to
| control and subsidize these to secure free and equal
| access, as well as ensure that developments of them occur
| in ways that benefit all members of society.
| bitcoinmonger wrote:
| This will be good for anyone interested in using modern
| cryptocurrencies, whilst also allowing governments to control
| access to accounts and adjust the money supply if necessary.
|
| It's a win-win for everyone.
|
| Also the energy required to secure the ledger will be
| dramatically reduced. Proof of work can be replaced by physical
| security, which is more energy efficient.
|
| Anyone wanting to rewrite the ledger would need more power than
| the government has in protecting it.
| KaiserPro wrote:
| > Proof of work can be replaced by physical security, which
| is more energy efficient.
|
| I'm not sure you understand how banking works. The BoE
| already has a ledger, its just private[1] for a number of
| reason (the banks accounts are published, but not in real
| time, and not by individual account). All banks have ledgers,
| and sometimes they even marry up.
|
| [1]well kind of.
| bitcoinmonger wrote:
| What would happen if you walked in to their server room and
| tried to update their database to reverse a payment?
| scrollaway wrote:
| Simply, "It doesn't work like that". Very similar to how
| you can't just "hack bitcoin and change your wallet
| value". At best you can use your web inspector to add
| zeroes to your balance.
|
| Transactions in ledger-based accounting require a source
| and target account. In double-entry, all transaction legs
| have to sum to zero. "$10 on Paul; -$10 on Alice."
|
| Your "current balance" may be cached, but it's never
| used. Most financial systems (which I suspect extends to
| banks, but I could be wrong) will enforce recalculation
| of at least the tip of the account's ledger whenever a
| transaction comes out of it. You don't just add/substract
| from a cached number.
| KaiserPro wrote:
| You would be politely asked why you were in a restricted
| area, and asked to leave.
|
| Currency is based on trust. Trust that the ledger is
| correct, auditable and matches up.
|
| but to address your question, its possible to
| unilaterally reverse a payment, but as you'll then have
| to tell the clearing house to reverse the transaction,
| you'll need to get authorization from thirdparty, which
| is tricky. Moving money around inside a bank though is
| probably much easier.
|
| However you're far better off just running a limited
| company and offering loans, that's a far easier way
| commit fraud.
| bitcoinmonger wrote:
| How do you know that I won't steal funds from your
| account?
|
| Do you simply trust that I won't, and that your bank
| trusts me not to do so?
|
| I suppose the question is, what's stopping me? Trust or
| security?
| KaiserPro wrote:
| In truth? I don't think your competent enough to get that
| far.
|
| but more deeply its both trust security, and legal
| liability.
|
| First you need to gain access to the system in the first
| place. Then you need to have unfettered access _and_ be
| undetected. Considering this has been the number one
| ledger attack since the beginning of time (which is why
| tally sticks were a thing, and double entry book keeping)
| There are lots of systems in place to stop, detect or
| alert. Not only that you have the statement generating
| system which sends out physical copies of the account
| monthly.
|
| Second we would need clearing houses to not notice that
| there is a mismatch in funds.
|
| third when you try to extract that cash, we'd need the
| money laundering alarms to not go off. Which, if you've
| tried to buy a house in the UK, you know is not at all
| trivial.
|
| You have to realise that the banking system is reliant on
| a bunch of very bored, highly motivated, fresh out of uni
| graduates to tally, move and generally be the grease that
| moves capital about. They will have tried all sorts of
| tricks to cheat, scam & salami slice money. There is a
| huge amount of effort going on to stop, detect and
| deflect fraud. Mainly because the banks are liable for
| it.
|
| So for standard bank accounts, the chance of someone
| getting access to a server and changing the values of my
| account and not being detected are pretty limited. Not
| impossible, but small.
|
| And thats the key. If the bank cocks up, the law is very
| much on my side as a consumer. the bank will be compelled
| to reverse the fraud. If they don't they get fined and or
| loose their license (although in practice, I don't think
| thats likely.)
|
| With zero trust, if someone cocks up a digital contract
| and someone extracts the entire escrow value, game over.
| no recourse, other than to try and take the perp to
| court.
| [deleted]
| selfhoster11 wrote:
| > whilst also allowing governments to control access to
| accounts and adjust the money supply if necessary. It's a
| win-win for everyone.
|
| In what way is more government surveillance and control over
| accounts a win for the average citizen? The rich will always
| find a way like they do with taxes, and it's the average
| person that suffers every time.
| bitcoinmonger wrote:
| I don't think we want to live in a society where
| individuals have complete control over their money, which
| is was cryptocurrencies like Bitcoin enable.
| jfjfntntkt wrote:
| Please tell me how I can transfer one pound from me to you
| using a 20 line Python script? That's what people mean by
| digital currency.
|
| If you are going to mention the open banking API initiative,
| then what are the requirements to get access to that? You can't
| as an individual.
|
| Also, this was the easy case, inter-UK. Now tell me how to
| transfer using Python and without applying to all kinds of
| regulators for API access a pound from a UK account to a
| US/EU/Japan account.
| JimDabell wrote:
| > Please tell me how I can transfer one pound from me to you
| using a 20 line Python script? That's what people mean by
| digital currency.
|
| It's been a few years so I don't remember the details, but
| I've written Python that was about that simple using
| Teller[0] without any problems. Didn't need a digital
| currency or direct access to the Open Banking API, just used
| normal Pounds Sterling and normal bank accounts.
|
| [0] https://teller.io
| jfjfntntkt wrote:
| A good start, but still suboptimal.
|
| It gives Teller full access to your account from what I
| read, can you limit it for example to just send money,
| without them going through your statements?
|
| And it's still only intra-UK.
| SideburnsOfDoom wrote:
| > And it's still only intra-UK.
|
| Wise (Formerly TransferWise) does forex.
|
| https://api-docs.transferwise.com/#wise-platform-api
| 300bps wrote:
| What happens if the person you send the money to doesn't
| deliver? What happens if someone compromises your account and
| sends all of your money away fraudulently? These are just two
| basic things that the current financial system deals with
| thousands of times per day.
|
| And what about fees? BTC, ETH and many other coins are
| essentially unusable for smaller transactions. Sending .02
| ETH (about $45) from my MEW wallet costs .00292 ETH (about
| $6.75).
| pessimizer wrote:
| Any government crypto wouldn't be a clone of bitcoin. It
| wouldn't place any importance on anonymity, untraceability,
| or immutability (quite the opposite.) There's absolutely no
| doubt that there would be massive controls over any
| international payments.
| jfjfntntkt wrote:
| The fact that there are problems to solve doesn't meant
| that we should just not have the thing.
|
| What happens if I give a street artist 5 pounds to draw my
| picture and then he flatly refuses?
|
| What happens if someone mugs me on the street and steals
| 100 pounds from me?
|
| Should we not have cash at all because of these two
| problems, and others?
| lottin wrote:
| The problems are already solved with the current
| financial system. That's the point.
| igammarays wrote:
| There are countries where the centralized banking system
| already makes scripted payments possible. For example
| PrivatBank in Ukraine, by far the largest bank, offers a full
| featured API for payments, protected by instant one-click
| authorization from their mobile app.
| KaiserPro wrote:
| > open banking API initiative
|
| as you've alluded to, its not open to consumers, only
| financial institutions, with good reason. It gives you lots
| of access to do all sorts of things.
|
| > how I can transfer one pound from me to you using a 20 line
| Python script?
|
| Now this isn't a usecase I had thought about. I mean there
| are APIs that I can use to interface to a specific bank that
| will allow me to do this. But they are hidden behind layers
| of bureaucracy.
|
| I think the issue for _consumer_ banking is making sure there
| is enough screening to make sure its not as easy for scammers
| and tricksters to get money from you.
| selfhoster11 wrote:
| > as you've alluded to, its not open to consumers, only
| financial institutions, with good reason. It gives you lots
| of access to do all sorts of things.
|
| How so? There's no reason a bank account shouldn't be
| programmable. If the worry is fraud and account hacks, that
| already happens when the computer is compromised or people
| get scammed.
| KaiserPro wrote:
| > There's no reason a bank account shouldn't be
| programmable
|
| Agreed.
|
| But until we have a better system of plainly showing
| access levels to one's account its a scammer paradise to
| allow access via said API.
|
| You and I are educated in the world of API access, so
| will think twice before clicking "agree" to allowing
| emoji corp access to my bank account to "verify your
| identity", but a significant number of people would
| blindly click allow. Until we have either educated the
| public, or made an access GUI that stops 99.9% of that
| kind of use case, its just not worth the hassle.
| kolinko wrote:
| > But until we have a better system of plainly showing
| access levels to one's account its a scammer paradise to
| allow access via said API.
|
| Nobody says such API would be connected to a person's
| life holdings. It could be low amounts that are safe to
| lose in case of a hack.
|
| Of course, you need to educate people to not put all
| their life savings into those accounts. But the same
| applies to multiple other services.
| pessimizer wrote:
| There's no difference between this and the transfers I
| can do on my bank's website. If anything, having a
| government crypto account would mean that the government
| would know who was on both ends of every transaction made
| through it, and could trivially reverse payments.
| max_ wrote:
| Or better, 0.000001 pounds for streaming a song from my
| privately hosted streaming service.
| throwaway3699 wrote:
| That's a tiny amount of money. Or are you going to listen
| to a million songs for PS1? It's still reasonable to batch
| a few hundred listens for a small transaction every month.
| jaredtn wrote:
| The parent comment was about enabling micropayments, not
| the proper price for a song. Forest for the trees...
| throwaway3699 wrote:
| I guess I'm more wondering what possible value such a
| tiny micropayment could be. There's no conceivable
| business that would charge in such small increments. Even
| an average ad impression is more than a penny.
|
| In fact, things are heading the other way, with
| "micro"-transactions in mainstream games sometimes
| exceeding the price of the game itself.
| betterunix2 wrote:
| Actually, the value of such a tiny micropayment is
| negative -- it would cost more just to process such a
| small payment than the amount being paid.
| max_ wrote:
| Spotify for example pays between $0.003 and $0.005 per
| stream [0]
|
| In the music business u don't make money on each song,
| you only make oney from hit songs.
|
| That song streamed 10 million times can earn you $50k.
| And it could be more if spotify wasn't taking a bite out
| of it.
|
| [0]: https://www.businessinsider.com/how-much-does-
| spotify-pay-pe...
| sec400 wrote:
| You can sign up for an N26 account via smartphone app and
| then use this (unofficial) python library
| https://github.com/femueller/python-n26
|
| I fully agree with you though, the Open Banking outcome in
| reality almost looks like a joke. I only found the above as I
| was searching for a while to find a way to do this that
| didn't involve building my own screen scrapers to implement.
|
| There are banking offerings in the UK with official APIs
| however you are looking at PS200/month+ in costs.
| analog31 wrote:
| Likewise, _explain_ how it works _securely_ in fewer than
| 20000 words to a non-mathematician. that 's what people mean
| by currency. ;-)
| betterunix2 wrote:
| That is kind of like insisting that you explain why paper
| money is hard to forge in less than 20k works to a non-
| chemist.
| jollybean wrote:
| "That's what people mean by digital currency."
|
| So often not though. Money without oversight will instantly
| attract the most nefarious users that governments don't like,
| so it's unlikely anything a government would propose is going
| to very easily allow things to happen without some kind of
| regulatory control.
|
| It's hard to fathom exactly what the point would be, because
| even the benefit of reducing VISA style transaction taxes
| from the current 2.5% to about 0.1% (which is where it should
| be) would incur the wrath of the institutions that make money
| from that and sponsor centre-right politicians in the UK.
|
| It's too early to tell, it could just be a political football
| for now, something to talk about, get attention, distract us
| etc..
| pessimizer wrote:
| Why would the money have no oversight? It would have
| complete oversight.
| selfhoster11 wrote:
| Starling in the UK already supports that (for individual,
| mere-mortal customers) if you are sending money to an
| existing payee. There is at least a couple of fintech
| startups that offer sending money (or even full-blown all-
| digital bank accounts) using a HTTP API call if you're a
| business.
| Nursie wrote:
| That's very unlikely to be what any central bank entities
| mean by digital currency.
|
| Open Banking is not available to individuals by design. Can
| you imagine the fraud levels if it was?
| veritascap wrote:
| The reason for a CBDC are new features. Money that can be
| programmed to only be used in certain ways, with certain
| groups, or at certain times, e.g. expiring money. It's more
| nudging power for our unelected technocrat dear leaders.
| Imagine the possibilities!
| Broken_Hippo wrote:
| So, less functional money? More complicated gift card?
| enos_feedler wrote:
| If the reason the government doesn't want to spend money on
| it's people is because they fear the money will be spent on
| the wrong things (outside the scope of what they are trying
| to fix) then making money less functional is actually more
| functional.
| LatteLazy wrote:
| I think it's more like making negative interest rates or a
| wealth tax unavoidable...
|
| /TinFoilHat
| [deleted]
| SturgeonsLaw wrote:
| Just think of it as money-as-a-service
| stunt wrote:
| The only thing this has in common with Bitcoin is "digital".
| The rest is pretty much opposite of what Bitcoin was supposed
| to be. (And I say "was supposed to be" because everyone has a
| different idea about what Bitcoin is today. But that's not
| related to this discussion here.)
| rvense wrote:
| I don't think anyone could credibly claim that Bitcoin is
| what it set out to be. The original paper calls it
| "electronic cash" and in its introduction describes private
| people using it for small transactions, replacing trust
| with cryptography. I would hope that a CBDC shares that
| original goal of replacing cash, though to what extent
| cryptography will be involved I'm not sure. (I do doubt BoE
| are just going to fork the Bitcoin code and spin up their
| own blockchain.)
| TheBlight wrote:
| >I've not really understood the need for a "digital" pound, the
| pound is pretty digital already.
|
| The need isn't for the consumer. It's advantageous for the
| central bankers. With it they can more easily control
| demurrage/inflation/deflation/confiscation (like the Chinese
| government plans to do with the e-RMB).
| bobthepanda wrote:
| How is it different from what we currently have, assuming
| that digital pounds/dollars/whatevers are convertible with
| existing currency? Is existing currency not issued digitally?
|
| When central banks issue cash now are they literally sending
| billions of dollars to the mint, trucking it off to a bank,
| and then the bank records it on a digital ledger? Seems
| wasteful.
| TheBlight wrote:
| The Chinese government explicitly states the new e-RMB will
| help them prevent money laundering, tax evasion, and
| "terrorism financing." The better question is, why is the
| current system insufficient for addressing these problems?
| bobthepanda wrote:
| Hm. I meant to reply to the parent, not you, so that's my
| bad; but I probably fat-fingered it.
|
| If they are in control of digital currency then they have
| a ledger of transactions, maybe? and if you have a 1:1
| record of every single ledger then it's a bit harder to
| obfuscate?
|
| Banks & businesses keep ledgers like these, but you have
| to 1. get your hands on it and 2. in case of multiple
| sets of books, you need to find the _correct_ one. And
| then you have to connect all the dots.
|
| Chinese capital and lending controls are very strict but
| this hasn't stopped Chinese and others to try and move
| money out of China. China has had repeated issues with
| things happening beyond regulators' reach until they
| become too big to hide and then have to be unwound, like
| excessive use of shadow banks for lending.
| aww_dang wrote:
| It is about giving more control to central bankers.
|
| Going fully cashless will make negative rates impossible to
| avoid. UBI can be more specifically targeted as well.
|
| Generally speaking, the money supply exceeds the total
| amount of cash in most countries.
| roody15 wrote:
| In other words a dystopian nightmare :/
| JumpCrisscross wrote:
| > _Is existing currency not issued digitally?_
|
| It is, but it's restricted. M0 is central bank money [1].
| Currently, only financial institutions have it. If the
| public could open accounts at the BoE, they too could own
| M0.
|
| CBDCs are a way to give the public M0 without putting the
| central bank into the retail banking business. That gives
| central banks powerful new levers. For example, cash limits
| how negative rates can go. If cash were to become scarce
| and most money were held as M0, the central bank could
| enforce negative interest rates by clawing back M0.
|
| Negative rates are feasible today. But were they to go
| sharply negative, they'd hit bank capital. Having the
| public directly hold M0 removes that side effect.
|
| [1] https://www.investopedia.com/terms/m/moneysupply.asp
| neilwilson wrote:
| Monetarist concepts have little place in a modern way
| world.
|
| Bank deposits are insured up to PS85k, which means they
| are as solid and as good as cash.
|
| It's well known that negative rates only bind on
| commercial bank deposits - if at all.
|
| Negative rates are just a tax on banks - which they
| recover by charging more for loans, and paying less for
| deposits like any other costs.
| gscott wrote:
| e-RMB would let them send out money as stimulus to
| individuals without needed to count it as money creation
| publicly. The Chinese will have an unfair advantage with
| money printing without hitting the value of the currency. The
| US cash payments to individuals has had a huge positive
| effect on our own economy and now China can do the same but
| hidden from view. China could take and send payments to Iran
| and North Korea outside the traditional payments system.
| Everything will be hidden from view.
| treespace88 wrote:
| I would imagine this could lead to interesting changes in how
| people are taxed.
|
| IE taxes based on savings instead of income.
| shadowgovt wrote:
| In a sense, inflation regulation is already taxing based on
| savings. When the value of the currency falls, everyone's
| savings is worth a little less (and the more one saves, the
| more one's relative wealth has diminished).
| thehappypm wrote:
| Though this is intuitive it's not really true in a real
| sense because it's trivially easy to avoid this "tax".
| Any asset -- down to a humble CD -- will beat inflation.
| However, assets increasing in value also increases tax
| revenue due to capital gains!
| mandelbrotwurst wrote:
| 1 year CD rates are currently about .65% in the US - well
| below inflation even if you're talking Core CPI only.
| betterunix2 wrote:
| Which is why TIPS were created -- at maturity TIPS pay
| the greater of the principle adjusted for inflation or
| the principle without adjustment (so if there is an
| extended period of deflation you will still get back the
| amount you put in, and thus benefit from the deflation).
| TIPS also pay interest, and the coupon is adjusted for
| inflation as well.
| arcticbull wrote:
| Inflation isn't a tax on savings because you're not
| supposed to be saving currency. You're supposed to be
| saving value by investing currency. That's how currency
| works: it retains value only for as long as necessary.
| Investments, on the other hand, retain value in the long
| run. No need to conflate the two. In fact it's a harmful
| narrative to try and conflate the two.
|
| This is a pretty fundamental misunderstanding of modern
| economics.
| matwood wrote:
| Where inflation gets people is typically with wages since
| wages rise slowly. People with large savings are not
| sitting on cash. They are invested in things that
| typically rise right along with inflation.
| pharmakom wrote:
| Digital currency makes negative interest rates possible,
| which is either exciting or terrifying depending on your
| view.
| betterunix2 wrote:
| Nothing makes negative interest rates impossible right
| now, in fact it is a reality in several countries.
| Obviously not something that is available to most
| borrowers, but government bonds with negative _nominal_
| rates do exist, and even US treasury debt has negative
| _real_ rates (i.e. accounting for inflation) for shorter
| duration notes /bills. Obviously there is a limit to how
| negative the rates can become -- eventually the market
| will find other places to invest -- but that would be
| equally true with digital currencies.
| mywittyname wrote:
| This is possible now, since there's a practical limit on
| how much business can be conducted in all cash.
|
| Even if every bank account in the country started
| charging an account fee to cover negative interest rates,
| people would continue to use banks because they are just
| so damn convenient.
| sneak wrote:
| Most US banks on the accounts of most US people (that is,
| the non-wealthy) likely charge more in fees each month
| right now than a negative interest rate would affect the
| balances.
|
| It's really only the wealthy who would be faced with this
| being any significant amount of money, and those people
| comprise a tiny minority of bank accounts.
| fab1an wrote:
| I fear there is a curious feedback loop on the horizon,
| where stuff like this accelerates flight into
| decentralized crypto which then again accelerates further
| regulatory scrutinity, including bans.
| zzzzzzzza wrote:
| uhm... physical cash is an anonymous payment system?
| SturgeonsLaw wrote:
| Which is why it's under attack. Here in Australia the
| government considered (though later dropped) a bill
| criminalising cash transactions of over AUD$10,000 between
| businesses and an individual.
|
| Covid was also used in government PR to try and sell the idea
| of a cashless society.
| xyzzy123 wrote:
| It looks that way until you try to put a lot of it in a bank
| or turn it into "big people money" aka capital. Roughly at
| that point governments would like to have some idea of who
| you are.
| aseerdbnarng wrote:
| What I believe the BOE is exploring is for each citizen to have
| an account with the BOE and the potential for the types of money
| that can be used in this parallel banking system.
|
| If we think of the financial system as plumbing, the central bank
| has direct pipes to banks but rarely to citizens. This is not
| usually a problem except when you need to do a big emergency
| stimulus push not having direct pipes to individuals means
| stimulus takes a long time to reach individuals (if it does at
| all). Even countries like the USA and UK had a challenge rolling
| out stimulus, so this is a mechanism to bypass traditional
| banking system in a crisis.
|
| Thats just the banking aspect, the interesting stuff is what you
| can do with the type of money issued. For example you can build
| inflation into the currency, to encourage the user to spend it.
| Or it can be tied to carbon credits as a way to encourage the
| purchase of environmentally friendly products. I am not saying
| this is what is going to happen, only that a digital currency
| directly issued by a central bank has the potential to be used in
| ways that is not readily possible right now.
| Symmetry wrote:
| That idea is usually associated with postal banking - letting
| citizens open a bank account at the Post Office that provides
| basic services, no interest, but no fees either.
| laurencerowe wrote:
| The UK simply mandated that large banks must offer fee free
| basic bank accounts to all and make ATM withdrawals free from
| any other bank's ATMs.
|
| (Most bank accounts in UK have no fees if you never go
| overdrawn anyway, but previously banks could refuse to open
| one if they considered you a credit risk.)
| dools wrote:
| The government doesn't need everyone to have an account at the
| central bank in order to deposit money directly into their
| account.
|
| QE doesn't stimulate the economy because bonds and reserves are
| functionally identical as far as bank capital requirements are
| concerned and reducing interest rate payments is deflationary.
| aseerdbnarng wrote:
| >The government doesn't need everyone to have an account at
| the central bank in order to deposit money directly into
| their account.
|
| It does make it _a lot_ easier. The US, for example, was
| issuing stimulus cheques because there was no way to directly
| transfer funds into bank accounts. The UK had the same
| problem, so they pushed their stimulus through employers. In
| both cases there was no direct pipe from the central bank to
| the intended recipient which is what I think is _most_ of
| what BoE is trying to achieve.
|
| QE was the equivalent of using a waterfall to put out a
| candle. If you squint hard enough and get drunk on supply-
| side wonk-juice you could convince yourself it worked.
| ObserverNeutral wrote:
| > QE doesn't stimulate the economy because bonds and reserves
| are functionally identical as far as bank capital
| requirements are concerned and reducing interest rate
| payments is deflationary.
|
| Actually reserves are slightly better!
| akdav wrote:
| https://link.medium.com/bhC5SA8JAfb
| monkeydust wrote:
| Probably lends itself GNU Taylor which works with central
| authority.
|
| https://taler.net/en/index.html
| canoebuilder wrote:
| Bitcoin, et al. seek to approximate a monetary system, to
| bootstrap a workable currency outside the traditional trappings
| of a centralized state. Being digital is not the point, it just
| makes the idea possible whether or not it works in practice.
|
| What exactly would a central bank "digital currency" bring to the
| table?
|
| Dollars, pounds, yen, are already digital.
| Nursie wrote:
| The change here, from what I can tell, is that you could have
| consumers directly dealing with the central bank, holding
| accounts directly with it, cutting out the traditional retail
| banks.
|
| I'm not sure one way or another if that's a good idea, and I
| guess they aren't either, hence the forming a committee to
| investigate.
| vishnugupta wrote:
| Indeed, that's the biggest change I could think of. Another,
| minor but important, change is CBDC will completely eliminate
| physical cash. How will that pan out is to be seen.
|
| FWIW, China has been the farthest on this path to the extent
| that they are claiming they will do a 100% rollout by next
| year's Winter Olympics.
|
| This is a really interesting phase in this space.
| gajotron wrote:
| This process of cutting out traditional retail banks destroys
| liquidity, which the central bank knows it would probably
| have to offset through either becoming an explicit
| uncollateralised lender to banks or other monetary policy.
| They are likely to be very conservative about that.
| razius wrote:
| Programmable money, they decide the rules on where, how, who
| and until when money can be spent.
|
| See chapter 6.4 here:
| https://www.bankofengland.co.uk/-/media/boe/files/paper/2020...
| slimbods wrote:
| If a business wants to hold cash outside of a bank, it has to
| use bank notes. This would give them the option of holding
| digital currency directly.
|
| Also you'd expect a ground up design of a digital first
| currency to include much lower cost of transfers enabling micro
| transactions and much better speed to settle.
| scoopertrooper wrote:
| This can be achieved while retaining the existing banking
| system.
|
| https://nppa.com.au/the-platform/
| cblconfederate wrote:
| It is a headache for banks, as they lose some of the rents (all
| kinds of public funds going through them). This should have no
| impact on cryptocurrencies.
| calltrak wrote:
| The "Bank of England" is a private bank and no one knows who the
| real shareholders are. Just like the Federal Reserve in the
| United States. The federal reserve is not federal and has no
| reserves.
|
| Private central banks print money out of nothing and lend them to
| governments at interest. The governments then tax the hell out of
| you to pay back these privately owned banks. Think you are free
| and living in a democracy. Think again!
| m1 wrote:
| Super interesting talk on this at
| https://www.youtube.com/watch?v=EM7NB1_NtC4
| rahimnathwani wrote:
| A bunch of comments in this thread claim that the pound is
| already digital, because you can send and receive pounds using a
| mobile app or online banking. But these transactions simply
| transfer obligations (debts) denominated in pounds between
| parties. They are not operations on actual pounds (i.e. on the
| central bank currency).
|
| You can trade 'pork bellies futures' quickly, and using nothing
| but a computer. But no one claims pork bellies are digital. When
| people trade, they're effectively trading IOUs, and not the
| actual bellies.
|
| A Central Bank Digital Currency would allow individuals to hold
| and transfer 'real' pounds (M0). Currently, only banks and
| selected other financial institutions can open accounts at the
| Bank of England.
|
| If you think you (an individual) can currently hold digital
| pounds, just because you have a bank account, consider this
| question. If you have 200k GBP in your bank account, and the bank
| goes bust, will you still be able to withdraw 200k GBP?
| suprfsat wrote:
| Are British bank accounts not FDIC insured?
| JumpCrisscross wrote:
| > _Are British bank accounts not FDIC insured?_
|
| No. They are protected by the FSCS [1].
|
| [1] https://en.wikipedia.org/wiki/Financial_Services_Compensa
| tio...
| rahimnathwani wrote:
| Even if UK banks were covered by FDIC (which covers only US
| banks), the limit is $250k (less the 200k GBP I mentioned in
| my comment).
|
| The UK equivalent is capped at 170k GBP per account-holder:
| https://www.moneysavingexpert.com/savings/safe-savings/
| nexuist wrote:
| Does the FDIC cover any other country's banks than the US?
| laurencerowe wrote:
| While deposits up to some amount are guaranteed FSCS, in
| reality the government simply can't stand by while there's a
| run on a consumer bank. Northern Rock was nationalized when
| this happened in 2008. Even with the FSCS, customers don't want
| to risk their money being inaccessible while they wait on their
| claim to be processed.
| danialtz wrote:
| You have a point here, but sadly most of the current state of
| art in CBDC research avoids storing accounts at Central Banks
| due to the obvious risk of disintermediating banking system.
|
| The points of others thread stays: what is the point of CBDC
| for individuals if the supply is not limited and not stored at
| Central banks...
| rahimnathwani wrote:
| I'm not up to date with the state of the art, but the March
| 2020 paper from the Bank of England seemed clear that
| balances would be held on a ledger at the Bank of England.
| Whether the balances on this ledger would be assigned to
| specific beneficiary owners, or only to intermediaries (like
| retail banks) wasn't clear. But, in either case, only the
| central bank could issue/mint new balances.
| BayesianDice wrote:
| There's lots of speculation here on what the Bank of England
| means by a central bank digital currency (CBDC) - people may be
| interested in the more concrete indications of what the Bank is /
| has been considering in a discussion paper which they published
| in March 2020:
| https://www.bankofengland.co.uk/-/media/boe/files/paper/2020...
|
| The chapter on Technology Design states "Although CBDC is often
| associated with Distributed Ledger Technology (DLT -- see Box 5),
| we do not presume CBDC must be built using DLT. Most existing
| payment systems are run on centralised technology stacks, and
| there is no reason CBDC could not also be built this way.
| However, DLT includes a number of potentially highly useful
| innovations, which can potentially be adopted independently of
| each other, allowing us to use the specific features of DLT which
| are most relevant and appropriate, without using DLT in its
| entirety."
|
| The paper also discusses the risk-free nature of the currency
| (compared to deposits held in a commercial bank where consumers
| in principle face credit risk if the bank defaults), resilience,
| and innovation. And it notes the interesting related questions of
| whether the CBDC would be interest-bearing, and to what extent
| consumers switching from commercial bank deposits to the CBDC
| would impact the commercial banking model (using deposits to fund
| lending).
| anm89 wrote:
| This is a key point. CBDCs have no intrinsic overlap with
| blockchain or crypto currencies. You could use a blockchain as
| part or all of the strategy for storing the data of your
| currency but you could do it without using these concepts at
| all. The more likely scenario here is that blockchains will not
| be used here.
|
| People should not confuse CBDCs with crypto. They are unrelated
| concepts.
| danialtz wrote:
| Amen.
|
| One does _need_ a decentralized ledger for CBDC, high
| performance databases are quite acceptable, as there is no
| problem of lack of trust in a permissined model (no
| systematic bad actor). If you listen to Moser (and Chaum)
| video, he even states somewhere the unnecessity of DLTs for
| retail CBDCs.
|
| There are still some benefits but not worth to bet against
| the blockchain trilemma in these early stages.
| ohples wrote:
| I'm curious what is the situation in the UK with regards to the
| universalness of banking services, especially electronic ones. .
|
| In the US we have a large portion of the population that is
| "unbanked" for a varaity of reasons and have to rely on sketchy
| and scam financial services like those prepaid debit and credit
| cards and "check cashing places".
| rahimnathwani wrote:
| Approximately any adult in the UK can open a fee-free bank
| account:
|
| https://www.moneyadviceservice.org.uk/en/articles/basic-bank...
| ben30 wrote:
| I think the value here isn't for consumers. It's having a central
| ledger that all of the main financial institutions use. No need
| to a move a % of your treasury reserves into the central bank
| each night. As the treasury department of Barclays for example,
| the central bank of england can see your liquidity buffers in
| real time, intraday.
| yur3i__ wrote:
| If this provides a solution for anonymised digital cash payments
| such that something like paypal or a bank transfer isn't
| necessary then i'm all for it.
| matheusmoreira wrote:
| It's a central bank currecy issued by a nation state. It's
| unlikely that anonymity will be a feature.
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