So easy to control people when you can decide what and with whom they can transact with.
Surprise! Your bank and credit card company can do that now.
As being proposed in the USA, a CBDC will only affect settlement transactions between banks. Everything else will stay exactly the way it is now except transactions will be much faster with settlements taking place in real time, 24/7/365 instead of only during "bankers hours".
You'll be able to split the dinner check with a friend by putting money in his account instantly at the dinner table.
And this is all much closer than most people realize. It is in trials now and expected to go live in mid-2023.
> As being proposed in the USA, a CBDC will only affect settlement transactions between banks. Everything else will stay exactly the way it is now except transactions will be much faster with settlements taking place in real time, 24/7/365 instead of only during "bankers hours".
We literally have just that. It is a lie that digital money is required for that
This is just side effect of them putting new system up just for that that allows that.
There would be nothing stopping them to do that for the "old" money. Hell, there are already systems for it, a bunch of banks in my country have it... of course they want extra for it (gotta pay for itself)
The fun is when, in the US, a customer needs access to a large amount of liquidity, they may or may not receive it, depending on the nature of their bank, their credit, and their relationship with their bank... beyond whether or not they have sufficient funds or not. "Daily withdrawal limits" (not just cash).
But we currently have the option to bypass those restrictions if we want. Isn't it concerning that these systems might become more or less "mandatory" at some point?
Anything imaginable *might* become "mandatory" at some point. As of right now, no one is proposing to change anything at the consumer level. The only impact will be faster, easier transactions.
So you put this becoming more or less mandatory in the future at roughly the same odds that wearing pink unitards will become mandatory? Any system like this that provides the capacity for heavy centralized control and censorship will at the very least have people attempting to leverage it to their own ends right? Not saying they will succeed but I think it rises above the level of "any random shit might become mandatory" right?
FedNow seems to lack some of the juicier potential features of CBDCs, like negative interest rates for individuals in the same way a bank might have on it's account with a central bank.
I can hand my friend cash at the dinner table. And that's what I do. No central authority needs to be involved in things like this, nor should that be required.
Yes, you can do that. And no one is proposing to change it.
You can also get mugged in the parking lot by the waiter or accomplices once he sees your wad of cash. Carrying cash is risky and cumbersome. This is why banks exist.
Those who don't want to carry cash will now have the new found ability to pay anyone instantly without it.
Any good implementation of a central bank digital currency should have some anonymity handling, or it's not really a good cash replacement (Unless the goal all along was monitoring, which of course will be the case in some countries). Being able to spend $500 on something without anyone knowing is important. As is not beig able to launder $5M without anyone noticing. "Tomatoes, not diamonds" is the key feature here.
That's the kicker; I don't believe there's any government that wants anonymous digital cash. If anything, they want to be the only ones that can track it.
Now you are assuming that "governments" and "citizens" are two disjoint groups with different agendas. That's a really bleak way of looking at it, at least in functioning democracies. I'd certainly protest loudly if some sort of anonymity wasn't part of the plan at every step.
It's bascically exactly how the bank+card+cash system works. When I purchase a car with a bank transfer, it's easily traceable. When I purchase a guitar with my card, it's traceable. But if I really want to buy something untracably I go to an ATM and get cash. Similarly in any CDBC that citizens shouldn't be protesting loudly about, you can simply grab cash-like tokens. They might have an amount cap, but so does cash. You could never really go and fetch an unlimited amount of cash without having authorities ask questions due to KYC requirements.
> Now you are assuming that "governments" and "citizens" are two disjoint groups with different agendas. That's a really bleak way of looking at it, at least in functioning democracies.
Functioning democracies are sort of like spherical cows or frictionless surfaces: they don’t actually exist but we pretend they do as a simplifying assumption. Sometimes we are having more sophisticated discussions about bovine anatomy or the friction of ice; other times we discuss the principal-agent problem as it applies to the administrative state within a democracy.
From "Money and Payments: The U.S. Dollar in the Age of Digital Transformation"
"Identity-verified: Financial institutions in the United States are subject to robust rules that are designed to combat money laundering and the financing of terrorism. A CBDC would need to be designed to comply with these rules. In practice, this would mean that a CBDC intermediary would need to verify the identity of a person accessing CBDC, just as banks and other financial institutions currently verify the identities of their customers.
In this regard, a CBDC would differ materially from cash, which enables anonymous transactions. While central banks are unable to fully prevent cash from being used for illicit purposes, a CBDC could potentially be used at much greater scale and velocity than cash, so compliance with laws designed to combat money laundering and funding terrorism is particularly important for CBDC."[1]
"Protecting consumer privacy is critical. Any CBDC would need to strike an
appropriate balance, however, between safeguarding the privacy rights of consumers and affording the transparency necessary to deter criminal activity."[1]
Privacy is somewhat considered, like in question 12, (How could a CBDC provide privacy to consumers without providing complete anonymity and
facilitating illicit financial activity?) but to me it sounds more like privacy as in safeguarding information from third parties than privacy from traceability.
> a CBDC would differ materially from cash, which enables anonymous transactions.
Anonymous transactions are possible with a CDBC too. For example as outlined in the link I posted in the message above.
The idea is similar to Gnu Taler: you withdraw CBDC funds onto some physical "cash card". The amount you can do would be limited, just like the amount of cash you withdraw from a a bank is usually limited. But it does mean that how you then spend the tokens on that "cash card" should be as hard or harder to pin to an individual than a cash spend - i.e. nearly impossible.
I don't disagree it's possible to have a CBDC and anonymity, but based on the fed's statements like the part you quoted it seems like from their perspective anonymity no longer being possible would be a feature.
I don’t doubt that some governments would see it that way (although I do doubt the fed would pull that off).
My argument is merely a) that there is nothing inherent to a CBDC making anonymous transactions impossible b) there are governments recognizing that this is an important feature of their planned CBDC - as they should.
the question becomes, are systems that are made up of humans making decisions, organisms themselves that make decisions against the humans within the system?
CDBC is way beyond that, it allows things like if someone has taken too many flights that year, bought too much sugar or alcohol that month you could make the offending purchases or all their purchases more expensive to penalize them. Or you know if they had a bad social credit score, too bad now your morning coffee costs 1.5X of the person next to you, maybe reconsider your actions.
Few reasons to implement this stuff unless that's your endgame.
You can do that now already. Only thing making it not legal is law.
Sure, with paper money you could just take it out of the bank and pay directly but you can do stuff to that too like making it more expensive to take out then track people who just take out big sums of money
Like, sure, all electronic makes it easier, but it is by no means impossible or even hard now. Again, only thing stopping it is the law, if that is fucked doesn't matter how money are transferred
Especially since it's more common now to pay digitally and not get cash from the bank and then use it in every day shopping.
I've adopted it too when merchants strongly encouraged it during the lock downs, and it's just so easy, I've kept it. I do spend more, but I don't know if there's a causal relationship -- would handing over bank notes make me more aware of what and how much I'm buying?
Also if you think of payment flows. I would guess that less than a dozen operators on average in each country cover nearly all of payments. And top 3-4 likely vast majority.
For Europe I believe VISA+MC, SEPA and maybe one or two domestic solutions handle most of transactions.
This is already an issues when global/regional payment processors start to apply either their local law or questionable company policies in the whole region or globally.
Payment processors being a near monopoly, this has a disproportionate effect.
It is one thing to be connected when it augments things and provides lots of benefits. But instead of adding we are moving many vital services into digital always connected realm to the point where they will not function without Internet connection. One day it will blow big time in our faces. I mean we already have warnings here and there like recent ROGERS outage disabling phone services including 911 emergency calls.
