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0 pointsadament5y ago0 comments

How? Maybe it is because I live in Denmark where I would claim we are close to a de facto digital currency: a large group(most people under 40) use credit cards or a phone based payment solution for all purchases, use a phone based solution for settling smaller (<3,000$) amounts between persons, and use online banking platforms for transferring larger amounts. We are charged negative interest rates on deposits if they total more than 50,000$. Sure underlying this we have a physical currency, but for many it is more a historical curiosity than a practical consideration in day to day life.

While I understand the technical differences, I cannot see why from a policy perspective the government or the central bank would be interested in a cryptocurrency like solution? Rather with the current system and Know Your Customer regulation for the banking system, they have tighter control with money transfers since they are all ultimately between bank accounts tied to named entities. I think it is more likely that we abolish physical cash than migrate to a more decentralised currency.

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iso8859-15y ago

Why this dichotomy between "non-physical cash" and "decentral currency"? These things are linked, but strictly speaking you don't have to choose between them.

Abolishing physical cash does not imply migrating to a decentralised currency. But migrating to a decentralised currency is probably only possible by abolishing physical cash; I don't see gold coins coming back.

So, how is it different to have your money controlled by a private key, and nobody having the power to seize those money? Ask every single person that has had their account frozen. Whether you think it happens for just reasons or not, surely you agree that it isn't the same as having an ecosystem of digital centrally issued money? Not just issued, but also seized, through courts and police.

adamentOP5y ago

Yes but exactly because the decentralized currency is much more difficult to control and explicitly circumvents parts of current banking regulations, I have a hard time fathoming that policy makers and central banks would advocate decentralized currencies. The post that I was replying to seemed to suggest that CBDCs would be decentralized or in some way inherently different from the centralized digital settlement of transfers that exists in many countries today, and I want to understand why that should be the case? Why would CBDCs work more like decentralized cryptographic currencies than the current financial system?

I am not passing a judgment on whether decentralized currencies are good, but I do not understand why central banks would move in that direction.

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