Reading it right now but no one to discuss it with until the link is out there, right?
Edit: this entire thing is dumb
In what way? R-
Until I better understand what a digital currency would actually look like in terms of functionality, I canât comment on that.
Iâd like to see some more use cases to tease out the benefits.
2 Likes
I saw a very useful and entertaining clip on the BBC newsfeed yesterday by Spencer Kelly [of BBC Click fame] which gave a basic insight into how the system is controlled. Iâm all for progress and canât wait to see how the ordinary person in the street accumulates, stores and spends digital currency. R-
1 Like
Their use cases basically state:
- they want to isolate it to a payment method
- they want it to be private and a supplement to cash, but a software system inherently canât be as private / they would intend to adhere to the same AML/KYC laws as financial institutions
- their potential use cases list things such as IOT payments which for all examples could just be initiated by a payment terminal thatâs already in place, then done via contactless
The only cool / useful thing in the entire response to the provided information was programmable money, which means in theory we could essentially write âcontractsâ that trigger payments
But this said it could be split from the centralised infrastructure ??? Which means itâd be handed over to the private sector
They also discussed just regulating stablecoins instead
Tl;dr I wanted a CBDC to replace cash. Entirely anonymous and not traceable, aside from the bare minimum (youâd need a ledger of transactions between centralised âwalletsâ so all balances were valid and verified)
Anything the private sector could build on top of that ideal i had, would have been great
Furthermore as itâs issued by the central bank the money would be guaranteed, to my knowledge. Like NS&I level, since if the Central Bank goes tits up we all have bigger problems to worry about anyways
Ok, now I understand your meaning. At least though the discussion has begun, and is ongoing, and CBDC may not come to pass in the currently described form. If at all. R-
1 Like
The discussion unfortunately is going to be leading via the private sector input, meaning the actual end-game stakeholders (you and me) will be paying for the privilege of ideally what weâd suggest to be built in to begin with
No such thing as âfreeâ money whatever system you use. The difference here being that the end user may have input into how they are charged. R-
Implementing negative interest rates. At present, negative interest rates could be set through imposing the relevant rate of interest (Bank Rate) on reserve holdings by financial institutions at the Bank of England. But as a new form of money provided by the central bank, some respondents noted that the interest rate on CBDC would present an additional means and technology to implement monetary policy. This could include the potential for setting negative rates and perhaps relaxing the effective lower bound.
UmmâŚwhat? They write as though setting negative rates is something to aspire toâŚ
Itâs an awful lot of waffle for something that isnât really going to change very much about the monetary system we already have. Unless Iâm missing something here?
Edit:
Interestingly, thereâs a new article on the FT about stablecoins. Stablecoins must face âdifficult questionsâ, warns Bank of England
It suggests that scrutiny is coming and that they need to make sure they are not making promises they canât keep. I recall seeing something about Tether having insufficient US dollars in reserve to back the currency.
They should just use the technology to democratise gilts
Thereâs more analysis here
If it directs QE to individuals, who knows where it will go!
Eh, CDBC in here as the Guardian mentions puts any central bank rates pressure on households. Not sure this is a good monetary policy or selling point.
Furthermore as they mention this could definitely cause a run on the banks, which could cause wider economic problems.
I think itâs much easier just to outlaw Facebook/Amazon/Google pooling major currencies together and backing it with a stablecoin for payments
If we are going to make a digital pound, we need to do the following:
- allow providers to build value-added services via something similar to a âBitcoin Walletâ, but for the digital pound
- pass QE directly to households rather than requiring banks to distribute it
- abolish cash entirely to push adoption
Itâs worth looking at where the digital Yuan is going. The FT today has the headline âThe end of privacyâŚâ Become an FT subscriber to read | Financial Times
Iâll reserve judgement until I see how it is going to be implemented. It could be fine, but I do have my doubts.
Ignore headlines. Theyâre meant to draw attention and influence the readers perception of the article.
Source; there was an experiment done where the same article were shown to different people with different taglines and the whole article theme changed from a simple headline swap
1 Like