(Replying to PARENT post)

Well, the current system as you describe is a two-level system with your bank in between; a CBDC allows you to "have an account" directly with the central bank directly and make/receive payments without needing a retail bank intermediary.

It also enables central banks to achieve policy goals that they could not earlier - for example, in the last big crisis all the quantitative easing did not result in as much actual lending to people in the economy as central banks expected; the retail banks between you and the CB had other interests. A CBDC enables a central bank to inject money in the economy directly to people and companies, bypassing the major retail banks.

👤PeterisP🕑5y🔼0🗨️0

(Replying to PARENT post)

I see. But then again I am a bit confused by this text in the report on digital euro[0], which was recently posted on HN.

“While the Eurosystem would always retain control over the issuance of a digital euro, supervised private intermediaries would be best placed to provide ancillary, user-facing services and to build new business models on its core back-end functionality. A model whereby access to the digital euro is intermediated by the private sector is therefore preferable.“

That sounds like a bank to me. But I guess it must be so that the relationship between the central bank and intermediary will be different.

I struggle to find the defining features of these CBDCs so that it is more than empty branding. I guess you might sum it up as “bringing the central bank and currency-users closer thanks to modern technologies”?

[0] https://www.ecb.europa.eu/euro/html/digitaleuro-report.en.ht...

👤povik🕑5y🔼0🗨️0

(Replying to PARENT post)

I think if we want to argue that central banks will soon be pushing for CBDCs to let people have accounts directly with the central bank we need to argue why they at the same time are opposing* narrow banks, which to me seems to be a different technical tool achieving an equivalent goal?

* At least the Fed seems to be: https://www.bloomberg.com/opinion/articles/2019-03-08/the-fe...

👤adament🕑5y🔼0🗨️0

(Replying to PARENT post)

Hmmm, wouldn't the CBDC be safer than any other place to put your money? So in a crisis, wouldn't you sell everything and put it in the CBDC including potentially government bonds precisely at the time the government probably needs to borrow cheaply?

That seems like a recipe for disaster to me.

👤dageshi🕑5y🔼0🗨️0

(Replying to PARENT post)

I feel the payment side is pretty relevant here: governments and central banks are starting to realize that as currency dematerilializes the VISA, MasterCard etc of the world are going to drain a significant part of the economy, which they would rather keep, being in the business of, well, managing those currencies.
👤riffraff🕑5y🔼0🗨️0

(Replying to PARENT post)

I read somewhere that in the US some banks took the QE money and put it back into their accounts with the Fed where it collected interest. Rather than lend it out, they essentially got paid just to hold it. There’s an economic argument saying that it made them safer, etc. but it doesn’t sound quite right to me.
👤sjtindell🕑5y🔼0🗨️0

(Replying to PARENT post)

Sweden is probably the most advanced in considering an "e" currency and so far the proposals have been of keeping the two-tier system, i.e., you still have an account with a bank.
👤zmk_🕑5y🔼0🗨️0