The Fed Is Evaluating Whether To Launch a Digital Currency and In What Form (cnbc.com) 53
An anonymous reader quotes a report from CNBC: The Federal Reserve is pushing ahead with its study into whether to implement its own digital currency and will be releasing a paper on the issue shortly, Chairman Jerome Powell said Wednesday. No decision has been made on the matter yet, he added, and said the Fed does not feel pressured to do something quickly as other nations move forward with their own projects. "I think it's important that we get to a place where we can make an informed decision about this and do so expeditiously," Powell said at his post-meeting news conference. "I don't think we're behind. I think it's more important to do this right than to do it fast." Powell added that the Fed is "working proactively to evaluate whether to issue a CBDC, and if so in what form."
The Boston Fed has taken point on the project, joining with MIT in an initiative on whether the central bank should establish its own digital coin targeted at making the payments system more effective. Fed Governor Lael Brainard has been a strong advocate of the effort, though several other officials, including Vice Chair for Supervision Randal Quarles, have cast doubts. Advocates such as Brainard say a central bank digital currency's benefits include getting payments quickly to people in times of crisis and also providing services to the unbanked. "We think it's really important that the central bank maintain a stable currency and payments system for the public's benefit. That's one of our jobs," he said. He noted the "transformational innovation" in the area of digital payments and said the Fed is continuing to do work on the matter, including its own FedNow system expected to go online in 2023. The test for a CBDC, he said, is "are there clear and tangible benefits that outweigh any costs and risks."
Some concerns even have been raised that if the Fed does not act more aggressively, the dollar's position as the global reserve currency could be challenged. Powell noted the dollar's position in the world and said the Fed is "in a good place" to make a decision on whether to implement its own digital currency. He expressed some concern about the regulatory landscape and said the Fed likely will need congressional permission should it decide to proceed. "Where the public's money is concerned, we need to make sure that appropriate regulatory protections are in place, and today there really are not in some cases," Powell said.
The Boston Fed has taken point on the project, joining with MIT in an initiative on whether the central bank should establish its own digital coin targeted at making the payments system more effective. Fed Governor Lael Brainard has been a strong advocate of the effort, though several other officials, including Vice Chair for Supervision Randal Quarles, have cast doubts. Advocates such as Brainard say a central bank digital currency's benefits include getting payments quickly to people in times of crisis and also providing services to the unbanked. "We think it's really important that the central bank maintain a stable currency and payments system for the public's benefit. That's one of our jobs," he said. He noted the "transformational innovation" in the area of digital payments and said the Fed is continuing to do work on the matter, including its own FedNow system expected to go online in 2023. The test for a CBDC, he said, is "are there clear and tangible benefits that outweigh any costs and risks."
Some concerns even have been raised that if the Fed does not act more aggressively, the dollar's position as the global reserve currency could be challenged. Powell noted the dollar's position in the world and said the Fed is "in a good place" to make a decision on whether to implement its own digital currency. He expressed some concern about the regulatory landscape and said the Fed likely will need congressional permission should it decide to proceed. "Where the public's money is concerned, we need to make sure that appropriate regulatory protections are in place, and today there really are not in some cases," Powell said.
We're not behind (Score:5, Interesting)
"I don't think we're behind. I think it's more important to do this right than to do it fast."
I think at this point, being behind is being ahead.
It's more important to not issue a digital currency right now.
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I think at this point, being behind is being ahead.
It's more important to not issue a digital currency right now.
Yes, pretty much so. All attempts to do so have been botched and did not result in things that deserve to be called "currency".
Not to be pedantic, but (Score:4, Insightful)
Aren't all of the world's currencies digital these days? I mean most people don't have paper money under their mattress or in a vault at the bank anymore, and most transactions don't involve transferring wads of cash in armored trucks. It's all number stored somewhere, added and substracted in sync between networked computers.
I assume they mean cryptocurrency, which leave me wondering why on Earth the Fed wants a distributed ledger, since they're the center of the current centralized financial system and they already own the current centralized ledger.
I can only assume they feel the need to get onboard the cryptocurrency bullshit train to nip all the ones they don't control / regulate in the bud.
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Sort of. Reserve banks usually keep electronic accounts for governments and big banks. The banks then keep electronic accounts for people and companies. The big banking fees are usually charged by those banks having to talk to each other, and they do it through pretty ancient systems. A national electronic currency that you could transfer easily using a modern system like a cryptographically signed order would be pretty nice.
You'd be mad to use distributed trust and a blockchain though.
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a cryptographically signed order would be pretty nice.
680,000 people in America work in accounts receivable. These people produce nothing. They spend their days checking credit references and badgering other people to pay their bills. There are roughly the same number in accounts payable being badgered. Even with all these unproductive people, about 15% of all business-to-business invoices in America are never paid.
Cryptographically signed orders linked to "smart contracts" that are automatically paid could be a huge boost to economic efficiency.
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No, it's a very good idea that needs some work. The last company I worked for had millions and millions of past due AR and always harped about improving that lovely metric, but due to particulars of that market, really didn't have a way to collect other than badgering customers. Of course, they were also huge and use their "bigness" to force crazy payment terms like net 120 or more onto their own suppliers.
Surely there could be a mechanism to dispute a smart contract, and it would act like an advanced lette
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Aragon Court offers dispute resolution. It's interesting stuff.
https://help.aragon.org/articl... [aragon.org]
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Unfortunately I don't think reducing the number of bullshit jobs would be one of the benefits.
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We already do automated withdrawals from bank accounts. If you didn't get that arrangement with your clients, it's because you don't have negotiating power.
Doesn't change anything (since 1682) (Score:2)
You already CAN demand payment on delivery.
Checks have been used in America since 100 years before the US was a country.
Paying with a crypto thingy doesn't add anything, doesn't have any benefit for the reasons companies do net 30 or net 10 or whatever. There are two reasons companies do that.
First, it's neither convenient nor secure to have someone authorized to make payments at the restaurant or store every day when the bread delivery shows up, again when the milk is dropped off, etc. The store m
Re: Not to be pedantic, but (Score:2)
Just invent an oracle which can determine when the real life deliverables have been fulfilled.
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> Aren't all of the world's currencies digital these days?
Yes, but you can also convert to physical cash and spend it without being properly tracked. They need to close up that loop-hole.
Plus how do you turn off cash. With purely digital money you can turn it off for a someone as punishment.
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When you give me cash, that transaction is not recorded in anyone's ledger.
When you give me USDCRYPTO, it will be.
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Its no different than when you use your debit or credit card. Lots of companies already buy up your electronic transaction records. Most people that I run into don't want to bother with cash and use cards as much as possible.
Places like Target are data scraping you, collecting credit card and ID info, wifi info, bluetooth info, video with recognition, and probably more that I'm not thinking of right now. They know what you buy and when, they know when you knocked up your GF. You can bet your ass they'll a
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Not arguing, I like cash. Just saying, crypto isn't that much different that what we already have - though it probably has more potential for future embarrassment.
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They will even pay to track you if they have to. Those grocery store loyalty cards appeared shortly after a time when the majority of customers began paying by credit or debit transaction vs cash or check.
Someone in marketing realized they were missing collecting data on the cash/check customers and probably a lot of interesting marketing insights into the behavior of nominally credit/debit users who maybe pay cash when they "pop-in for a single item".
So they issued everyone a new token and offered a sligh
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When you give me cash, that transaction is not recorded in anyone's ledger.
When you give me USDCRYPTO, it will be.
On the plus side, you do not have to give VISA, MC, PayPal, etc. a cut when you pay electronically. Currently you have to.
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Aren't all of the world's currencies digital these days? I mean most people don't have paper money under their mattress or in a vault at the bank anymore, and most transactions don't involve transferring wads of cash in armored trucks. It's all number stored somewhere, added and substracted in sync between networked computers.
The main difference between Digital Currency (DC) and the more commonly used bank transfer or credit card, is that DC do not require a third party (e.g. a bank or VISA/Mastercard) to settle the payment. It can be done directly between payer & payee.
Yes, any payment probably can eventually be traced. The purpose of DC is to make 3rd party no longer necessary in settlement, hence removing the ability of anyone to prevent/stop payment globally. Now you see why China pushes DC forward while the Fed kept
Re: Not to be pedantic, but (Score:2)
The fees are high, usability low or the terms of use make lots of legal commercial activity unavailable. Read the Zelle terms of use for instance.
SEPA is censorship free, but there is no mandate for bank apps to support standards for automatically iniating payments (such as the EPC QR code) so it's not all that useful for online payments.
We need a convenient, low-fee/no-chargeback (tied at the hip), censorship free online payment system.
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Aren't all of the world's currencies digital these days?
No. What the mean is a cryptographic currency that can be exchanged without the help of a bank. Banks can only hold money in digital form because they are heavily regulated and audited. Otherwise they could just add a few zeros to what they are holding.
Here comes the tracing (Score:2)
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Blockchain is a very inefficient distributed database and verification protocol, doubt they'd use anything so constipated and badly designed. Its issues are part of what make bitcoin so illiquid.
Blockchain, the solution to a problem no one has identified yet. Better solutions have existed for decades of course.
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Yeah, do you really want "nerds with GPUs" to be the backbone of your financial system?
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The problem bitcoin/blockchain solves is how can two people who don't trust each other transfer money without a mutually acceptable 3'd party acting as some kind of broker or facilitator? I get that the slash crowd is pretty anti-bitcoin. But I think it is possible to be objectively anti-bitcoin. You can list the "better solutions" that have existed for decades, but if they don't solve the whole double-spending thing, then don't bother.
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Your problem doesn't need solving, submit to the rule of law. Your income is the government's business as are your capital gains. Your transactions are the governments business if they are illegal. You want to do illegal things and we the people won't let you.
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The problem bitcoin/blockchain solves is how can two people who don't trust each other transfer money without a mutually acceptable 3'd party acting as some kind of broker or facilitator?
This is only a problem between a criminal and the victim.
What could go wrong. (Score:4, Funny)
> Brainard say a central bank digital currency's benefits include getting payments quickly to people in times of crisis and also providing services to the unbanked.
Maybe they can link it to vaccine passports. That way if you miss a booster they can digitally turn off all your finances without having to deal with banks.
Then they can trace where you spend your money: liquor store, ice cream shop and if you blow out your liver or get diabetes they can say it was self inflicted and hold back payments.
Aiming for launch. (Score:2)
Mars bucks, because if we're going to be launching something, it'll be a goal we all can agree on.
congressional approval? (Score:1)
Ironically, this just MIGHT pass a Republican-led congress, once the right-wingers decide that they're the ones that invented the idea. At that point, it'll be all-amurcan. The Dems will nod in agreement and we'll manage to implement it 5-10 years too late, but better late than neve
Trying to muddy the water. (Score:4, Interesting)
The point of crypto is to keep it out of the control of any government or any other power. It's designed so that if you wanted to destroy a crypto you would have to invest so much that once you had control you would only be burning your own money if you tried to sabotage it. From the start it has a built in inflation rate as well a presumed expectation of people loosing their passwords. Governments can't control a crypto currency unless it's designed for them to control which would make it the equivalent of cash so why even bother except it would be digital transactions which could be more easily tracked by computers.
I don't get why people even bother with bitcoin as there are more private coins out there. I think the more tracked ecoins out there the more governments hope you trip up and associate accounts by accident. It's the same theme as why governments don't want people to get in the habbit of encrypting all their communications and using good crypto hygiene.
It sounds fine to me, (Score:2)
Not a bible thumper per se but... (Score:2)
You can check my long history on slashdot for religious posts, I'm betting there isn't any but, isn't this the kind of stuff that revelations said would start marking the end of times? A universal currency?
Call me one of the old fashioned skeptics on this, but I don't think the US will do this correctly. I'm not saying technically, the Government has a lot of smart people employed, but right now we have so many black hole projects that we have no idea how the money even gets there, I just see this as maki
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Precisely. And included in that is all people, rich and poor, great and small, were made to receive the mark in their head or right hand, and no one could buy or sell unless he had the mark, which was the name of the second beast or the number of its name.
This was mentioned 20 years ago by quite a few non-religious people when the topic of RFID implants in their hands to use as a payment “wave”. Dismissed by many then, and now we have Apple Pay, where you pay with a thumb print or a picture of y
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Yeah, except that “shortly” is a nebulous term, and we are talking about a vision by one of the disciples. Jesus said that no man will know when. Since the prophetic vision has not been fulfilled, one who actually believes would take it as fact that these things are yet to come.
For those who don’t believe, it doesn’t make a difference whether the vision was of events 6 months after, 2000 years after, or 10,000 years after.
The US federal reserve should embrace bitcoin (Score:2)
The US should just embrace bitcoin. The fed could quietly acquire a bunch of coin, and then sell either dollars or bitcoin as needed to stabilize the price against the dollar. Of course if they ever ran out of bitcoin they would be in trouble. So it would have to maintain the peg by fear-based mechanisms. Nobody would want to fight the fed if the fed demonstrated strong resolve in maintaining the peg. This would eliminate bitcoin as a way to hedge against the dollar (since the price is pegged). This COULD a
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I don't think they would be able to enforce the peg at unity. LOL.
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Your post is filled with reasons explaining why the fed shouldn't embrace bitcoin.
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They should embrace AND CONTROL it. Other countries have foolishly passed up their chance to bypass the US dollar. This creates an opportunity for the Fed to control bitcion so that no country will be able to bypass the dollar later.
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This will happen poor upward. Like El Salvador, then another poor country. Then another. The US wants to keep it's sovereignty, when it doesn't realize it's already lost the game.
Understand (Score:3)
This in turn will enable me to retire early.
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Digital currency main reserve is going to happen (Score:2)
It is inevitable that, sometime in the next century or two, the US dollar as we know it will cease to be the world's main reserve currency.
The Fed can get ahead of that change by properly designing and issuing a "FedCoin", with a high probability of it becoming the new leading reserve currency. Or it can wait and watch ChinaCoin do so instead.
As other commenters have noted, there are considerable advantages to having a digital currency not based on blockchain. And, of course, there are also advantages to
how is THAT going to stand against inflation ? (Score:2)
Oh, but look ! Block chain ! It's "technology" !