Related:<p><i>U.S. is considering a radical rethinking of the dollar for today's digital world</i> - <a href="https://news.ycombinator.com/item?id=30239803" rel="nofollow">https://news.ycombinator.com/item?id=30239803</a> - Feb 2022 (101 comments)
Can someone explain to me how is this different from how money is in my bank account right now? Is the difference something like an int (just a pure number) vs something like an abstract data type like Money where you can have fields like source/destination/purpose/date issued/etc. for indexing and tracking purpose?
I feel like this is the primary justification the US gov would have for issuing a CBDC. It's smack in the middle of the "potential benefits", so it's clearly the most important.<p>>> Today, the dollar is widely used across the globe because of the depth and liquidity of U.S. financial markets, the size and openness of the U.S. economy, and international trust in U.S. institutions and rule of law. It is important, however, to consider the implications of a potential future state in which many foreign countries and currency unions may have introduced CBDCs. Some have suggested that, if these new CBDCs were more attractive than existing forms of the U.S. dollar, global use of the dollar could decrease—and a U.S. CBDC might help preserve the international role of the dollar.
Wasn't this a conspiracy theory not that long ago?<p>And this is bad. This means that one entity can take away everything from you with one click, so you can't even buy a pack of bubblegum, and on the other side, you can't even buy a dildo, without some entity tracking that somewhere.
As a follow up, the first steps of Project Hamilton (the exploration of how to build said CBDC) were also posted. It is a collaboration between the Boston Fed and DCI@MIT: <a href="https://www.bostonfed.org/publications/one-time-pubs/project-hamilton-phase-1-executive-summary.aspx" rel="nofollow">https://www.bostonfed.org/publications/one-time-pubs/project...</a>
> Examples of current experiments include<p>> building a hypothetical CBDC that would leverage existing technologies and systems: The Board's Technology Lab has been assessing the potential of a centralized CBDC design that leverages existing infrastructure and technology;<p>> exploring a CBDC design that would leverage newer technologies, such as blockchain: The Federal Reserve Bank of Boston is collaborating with the Massachusetts Institute of Technology's Digital Currency Initiative to explore the development of alternative platforms;<p>So, it could be centralized, it could be block-chain based. The potential range of what they could be talking about is so broad that it's hard to make anything specific of it.<p>But an interesting area of concern that they kind of skate by is how to safeguard against future innovations in cryptography. Will quantum computers be effective enough in 10 years to break a lot of public key cryptography? How long should people have an expectation that their financial activity remains private?
The majority of US money is already digital, it exists as "digital balances held by commercial banks at the Federal Reserve"<p>This paper just is adding a new shiny coat of paint to an already existing mechanism, just with new terms to make people think they're hip.
Unless it comes with safeguards regarding anonymity and protection from seizure, I feel that this will give the government too much power and surveillance. What will prevent the government from holding individuals accountable for making transactions deemed immoral or dangerous? It seems all you have to do is characterize a movement as terrorism and you can seize assets at will.<p>A world with physical currency has a builtin "privacy mode" in that you can conduct business just using notes and keep it in notes.<p>The US stopped printing notes larger than $100 in 1969. That $100 note in 1969 had the buying power of roughly $780 today due to inflation. I think it's well past due that the government print larger notes, allowing more economic freedom, but I understand why they don't. Even a $500 note doesn't bring us back to cash buying power parity with 1969.
Cool things to do with CBDCs:<p>- Abolish filing your taxes. All taxes can be calculated and payed automatically from your bank account, you don't even have to check. No more tax evasion!<p>- Manage the money supply more effectively. This is very complicated, you wouldn't understand, but it is very importing for achieving the Fed's mandate of price stability^H^H^H^H full employment^H^H^H^H 2% inflation^H^H^H^H 2% aggregate inflation^H^H^H^H climate change targets<p>- Track exact carbon footprint of every citizen, track calorie intake, sugar intake, meat consumption, condom use, and leverage this capability to assess and promote your physical and mental health<p>- Easily restrict specific individuals from certain purchases like guns, alcohol, sleeping pills, gasoline, lottery tickets, soft drinks, pornography, the book The Real Anthony Fauci, and other hate speech<p>- Turn off payments for terrorist, fugitives, people at risk of fleeing, illegal occupants of infrastructure, or for quarantined people beyond a five mile radius from their homes
Given the current geopolitical events, I'm note sure to understand how any country would agree to jump into the use of this CBDC.
My understanding is that with this new tool, the fed will be able to know where is the money in real time. Tough this makes a lot of sense from th FED side ( solutions implemented addresses in 2008 failed mainly because money received from th central banks failed to be re-injected in the real economy).
Not sure to see a large enthousiasm from other countries to have this asset denominated in this USCBDC Being remove in one click....
So, if this goes through, would this make crypto-currencies competing currencies and therefore illegal?<p>I'm unsure how the regulatory actions of counterfeiting and competing currency laws work, which is how I ask... would this have to be written into a separate law, to outlaw or regulate the current crypto market, or would it already be folder into the current legal structure when/if the USD became a "digital dollar" with a similar format?<p>After a quick glance, it is mentioned that this form of digital currency is made in an attempt to cut down on financing illegal operations, so there would be some sort of ID'd blockchain tied into this... I would assume. Simple enough, put your social in with the block chain. Not a huge amount of memory more, I guess. My understanding of the block chain isn't extensive. I can only assume this is a backdoor route to exterminate uncontrolled currencies, which would make the above make sense... or are those just "traded goods" at this point, like baseball cards, or Beanie Babies? Or can those be, practically, made illegal?
> CBDC transactions would need to be final and completed in real time, allowing users to make payments to one another using a risk-free asset.<p>Interesting choice of words for a monetary instrument which can be arbitrarily inflated or seized by third parties.<p>And this doesn’t even touch on the political risk inherent to “national” monies.
The paper conveniently dodges a few critical items of attention.<p>The first one is that the CBDC is a (crypto) currency to promote or maintain the dominance of the dollar in the world, as they openly state in the paper itself. This in itself is not unexpected but violates the idea of most cryptocurrencies, they are internet money, detached from national currencies, national interests or national rules. Only in the exchange back to fiat money do local interests play a role. So this is more like a stablecoin, with better backing.<p>The paper self-congratulates current central bank money as the safest money in the world, which I'd say is not entirely false, but at the very least I would expect monetary expansion (inflation) to be deeply discussed, but it isn't.<p>It mentions the current private cryptocurrencies and their many downsides, without listing upsides. Suspicious and biased. I don't care if you're pro or anti crypto, but its assessment cannot be this simplistic or binary.<p>Another item that comes top of mind is anti-seizure legislation. Recent events as seen in Canada (using an emergency law to seize assets) and the Russia thing where reserves are simply frozen are raising some questions about the safety of digital money. If any emotional politician can just push a button and take your assets, people will feel unsafe. The authority question goes unanswered in the paper.<p>The paper correctly establishes that privacy is critical but then also goes on to say that everything needs to be reported. A contradiction, so we'll find a "balance". Elaborate on this balance, because there is none. Every single transaction ever will be on record.<p>Not a word on the dangers of cryptocurrencies being programmable. Under the pressure of ever-changing politics, these could make possible restrictions on money currently barely possible. For example, they can put an expiration on your money, forcing you to spend it. Or, block the buying of particular products directly from your wallet. It's a potential huge jump in authority, but it's barely mentioned.<p>It dances around a lot of hot and inconvenient issues.
It seems like many central banks are investigating this space. Here is a similar paper from the Reserve Bank of New Zealand <a href="https://www.rbnz.govt.nz/news/2022/02/innovation-key-to-the-future-of-money-and-cash" rel="nofollow">https://www.rbnz.govt.nz/news/2022/02/innovation-key-to-the-...</a>