Swedish bankers face identity crisis over digital currency plans
reuters.com
reuters.com
Digital cash is first and foremost an instrument for new ways to do monetary policy, as more countries (like Sweden and EU) are heading towards a Japanese situation. Playing it as a tool for consumers to fight banks is just marketing/storytelling to gain support and adoption.
If you assume 2% bank fees and a -3% interest rate it would be possible for banks to hand out -1% loans and that would allow financially insecure consumers to acquire loans because you cannot default by definition. Your principal will shrink even if you do nothing.
Will this work? I feel like it could work but it could also have unintended consequences.
That's not what default means. If you stop making monthly payments, you're in default. From wikipedia:
> Default may refer to: Default (finance), failure to satisfy the terms of a loan obligation or failure to pay back a loan
Sure, they already have the opportunity to demand that information from Swedish commercial banks and other financial institutions, but it's not as convenient as the direct control they have with a centrally managed digital currency.
The really nice thing with fungible physical goods like paper currency or similar is they are not in any shape or form tied to my identity. That's a feature.
Like many other countries have had before (such as USA), we are now living with brutal gangs grouped together per ethnicity, except for native Swedes, Finns, and Sami people though. The worst of the new wave of robberies we call “humiliation robberies” (förnedringsrån, you can search with Google Translate) where the victim (mostly natives) is not only forced to withdraw from the ATM, but tortured, forced to undress, pissed upon, forced to say humiliating things, or raped (also men and boys).
The last of many examples to make headlines, where the perpetrators were found, was two young guys in Solna who were forced onto a church yard at night where they were beaten, raped, tortured and robbed. Mainstream media in Sweden does not publish details so I’ll link you one mainstream media article, and one independent blogger - again you might want to use a translation service to read it
https://petterssonsblogg.se/2021/01/07/ali-och-amin-doms-for...
https://www.expressen.se/nyheter/solna-man-misshandlade-pa-k...
Young Swedes today know where not to walk after dark in a way their parents never thought about.
If my personal account, the example, or a search into “förnedringsrån” isn’t what you’re looking for, please let me know! You are absolutely right to want to verify claims.
I must admit over some skepticism given the extreme loucheness of the banking sector.
With central banking, the supply can be infinite, and that’s what we Swedes are seeing with NEGATIVE interest rates. Jyske Bank in DK borrows to consumers house loans where you are paid to borrow. It can not end well, please someone show me logically/from first principle how it ever can.
this world is horrible when you look into the details, working and helping other people is not rewarded at all
profiting from other people is what best people can do to have a better time on this planet
Central bank digital currencies (CBDC) basically operate with a centralized database; no "mining", no pseudo-anonymity, most important, no gambling-like course changes. It represents the "offline money" 1:1, only is it managed centralized rather than federalized by many banks.
Seems to me that perfect visibility into funds will be as deleterious to society as perfect law enforcement. How are you going to lead the next BLM, or LGBTQ rights, or just a plain old revolution when you can't fund anything?
There was a time, not long ago, when being gay was actually against the law. Imagine wanting to build a civil rights organization for homosexuals, but being unable to fund it because the government immediately and exactly knows which people associated with such a criminal enterprise.
My gut feeling is that these are societal issues beyond the mere implementation of money. You could have policies that protect donors of societal organizations and automatically wipe associated records.
I think the reality now is that big money is being laundered and stolen from society by big corporations. At the same time it's an illusion that citizens have anonymity in our daily endeavors.
Look at Bitcoin. Pushed by anarcho-romantic illusions, it's the dream of non-regulated big money gambling that hurts society...
We should focus on making our society robust, open and inclusive instead of thinking that we need some decentralized crypto solution.
These are known to give a fuck about society, shutting down things as they like, and even bringing US jurisdiction into other societies.
The advantages of anonymous payments are purely hypothetical for normal people and only benefit big players. Having digital central bank money would enable us to cut off the private money industry that makes a living with data analysis.
In Sweden, nationalists, libertarians, and conservatives are hounded by the state.
The fact that food is produced in abundance and is distributed in time to population centres for convenient consumption is a marvel of the modern world. And we're only getting better at it over time.
That's helping people.
And I mean, the MRNA vaccine seems pretty amazing that rollout began worldwide in less than a year from a novel coronavirus popping up. But the same people working in agriculture aren’t working on virus research. The market decides where to allocate resources, are you advocating for some sort of central planning in lieu of this? What would a different system look like that doesn’t have the major pitfalls that the Soviet government had, where strange things happened like nearly hunting whales to extinction because they needed to make the 1967 whale oil quota?
You might be conflating "helping people" with "convenience" whereas what you truly want to say that "market economy" has made products/services "affordable". But, that's, again, not an inclusive statement. Markets only offer access to goods/services to the extent that actors are able to afford them. And clearly not everyone can afford to buy enough sustenance on a daily basis to not go hungry.
The same is true for being able to afford to attain equitable prices as a seller. If you can't bring enough leverage to the table, you will have to accept price levels as they are determined by bigger players who dominate market supply. It might mean that you get out priced, and that your business proposition - no matter how good the idea was - simply won't generate revenue because someone else can provide the same thing for less then peanuts.
Both cryptocurrency and food are the epitomes of that.
Massive amounts of food are being produced to the extent that there's massive amounts of waste across the entire supply chain. None of that happens out of charitable or altruistic intentions. It's not even produced for your personal convenience as a customer.
Flooding markets with massive amounts of supply is a strategy aimed to drive the prices down to a point where competitors have to call it quits. The aim/risk is to generate a razor thin margin which is still worth the investment. At the scale of global markets, that's still billions of dollars worth in profits.
The same is true for cryptocurrency. The price on cryptomarkets isn't determined by the many hands who hold fractions, it's determined by those who have invested the largest amounts of leverage. And they will use that to influence the prices if the incentive for scalping profit and/or acquiring/controlling a larger share of a scarce/finite resource becomes too enticing.
"Market economy" only helps certain groups in certain circumstances. It's definitely not an equitable way of "helping people". On the contrary.
this is less true than it has ever been in human history; the only places with true famines in the modern world are those cut off from global markets by war, or dysfunctional states that are cut off from global markets like NK. your statement is either willful blindness or some kind of bone-deep cynicism -- "nothing good has happened because bad things still exist".
Beware of the "no true Scotsman" fallacy.
Here's some sources about food insecurity in the United States:
[1] https://www.npr.org/2020/09/27/912486921/food-insecurity-in-... [2] https://time.com/4477157/hunger-america-history/ [3] https://www.fns.usda.gov/snap/short-history-snap [4] https://www.nap.edu/read/11578/chapter/4 [5] https://en.wikipedia.org/wiki/Hunger_in_the_United_States
I could continue on. There are entire libraries filled by countless research and public policy programs with studies and monographs on the subject.
And that's just the United States.
Hunger is a massive issue anywhere in the world. And I will bring this to the table as an established fact whenever someone praises the virtues of a concept as vaguely defined as "market economics" while omitting the realities.
> your statement is either willful blindness or some kind of bone-deep cynicism
I'm unwilling to discuss this any further having being called "blind" and "cynic".
https://www.google.com/search?tbm=isch&q=deaths+by+starvatio...
"People die in car crashes", "People don't have access or can't pay for healthcare", "Student debt is a massive problem", "Home ownership has become prohibitively expensive"
"Nothing good has happened because bad things still exists."
Sure, good has happened. But I'm pointing out that the "good" part shouldn't be prioritized as an absolute, nor used as an excuse to look away from the "bad things".
Read my comment again. I concluded with:
> "Market economy" only helps certain groups in certain circumstances. It's definitely not an equitable way of "helping people". On the contrary.
The first sentence literally acknowledges the "good part", the second sentence points out that this isn't an absolute and that glaring issues are facing humanity eye-to-eye.
Beyond that, I could intepret "nothing good has happened because bad things exist" as another way of you, for whatever reasons, just trying to outright hand wave the very real concerns I've put on the table.
In which case, I, for my part, am entirely unwilling to continue this discussion.
If you look closely there is no way to send or receive digital payment without using a private company service, which in turn can terminate it's services for you for arbitrary reasons, other people will just shrug and say it's a private company.
Physical currency right now has unique abilities not mirrored by any digital equivalent and allows one to survive and exchange money p2p even if ones name will be blacklisted by private companies for some reason. Yes, probability of this kind of event could be incredibly low but it's still there and I believe that it can increase with various attempts to build "credit score" systems.
Now banking is an app. Haven't used cash since forever- you have to literally google maps the nearest ATM.
And not only 'the south', Berlin (Germany) has it too; many places don't take cards; they insist on cash.
But centrally issued digital cash can be anonymous. There exist cryptographic schemes where tokens can be exchanged peer-to-peer in a way where the issuing bank can't identify participants until tokens are double spent. Double spends can then be charged against the account of the double spender when the recipient of a transaction deposits the tokens. These schemes are far more efficient, natural progression to our current fiat monetary system than Bitcoin or any of the other "crypto currencies".
The only reason we don't have this tech today is there are no incentives for our governments or banks to maintain the anonymity of cash.
https://archive.org/details/CryptographyOfAnonymousElectroni...
> Riksbank Deputy Governor Cecilia Skingsley has dismissed such concerns, saying people can already exit the banking system by buying treasury bills.
Not sure about Sweden but I don't believe many retail banks make buying t-bills as easy as a click of a button, unless you were using their brokerage.
Few laymen are excited about converting their cash to t-bills. But digital currencies like CBDCs are part of the cryptocurrency wave that has a lot more of the general population interested.
This question is hard to answer. As there is a conflict between what the bank does (i.e. provide debt), and how it is supposed to provide it (by taking savings etc.). Everything else, from central banks "offering cheap liquidity" is an add on. They are mechanisms that allow - for example, a bank to easily borrow this money so that they can cancel it out/repay it from transactions coming into their banks.
What makes it all borked is that you can't trust bankers with their grandmas. If there is a flaw, they will exploit it. Every major change has led to an exploit. E.g. In 1918, the American Government introduced the Leased Wire System that used the telegraphs and a network of 12 Reserves to allow banks to transct with each other across CONUS. It reduced the average time for cheques to be cashed in at banks across the country from 5.4 days in 1912 to just 2.4 days. Theoretically, this reduced the risk taken by banks when they transacted with unknown banks across the country, with the Government acting as the escrow. It catalysed innovation and led to an explosion of financial services across the young country.
The system was supposed to be foolproof by reducing the time "credit" was needed to make transactions. Essentially, until one bank sent the money and the other got it, they were operating on a system of credit. And they would "net" the books at the end of the day/week to physically transfer assets. FedWire (Leased Wire System) made everyone feel safe by sending notes of the transactions across great distances. But the netting still took time. All it took was one bank to fall behind on current obligations to other banks for all of the banks to collapse, leading to the Great Depression.
Important people got together and made rule changes to fix the problem. But then they innovated again. The Federal Reserve started making Automatic Clearing Houses (ACHs) and Remote Check Processing Centres (RCPCs) to make settlement faster, starting in the 60s and precipitating in 1972. This made settlement faster therefore safer. And it led to great financial innovation. The magic of computers and innovation meant that people could use these same systems to transact across the world!
Until in 1974, when the German lender Herstatt collapsed due foreign exchange investments based in the Dollar, which caused the bank to fail to meet its settlement obligations...
> That day, a number of banks had released payment of Deutsche Marks (DEM) to Herstatt in Frankfurt in exchange for US dollars (USD) that were to be delivered in New York. The bank was closed at 16:30 German time, which was 10:30 New York time. Because of time zone differences, Herstatt ceased operations between the times of the respective payments. The counterparty banks did not receive their USD payments
This is a simplified history. But the history of banking is the history of doing settlement while managing liquidity and counter-party risk.
No one can predict how this will turn out. But we shouldn't cheer the government cutting out the middleman and going into the business of settlement and direct debt themselves. The Great Collapse of 2034 might be precipitated by it.
https://fraser.stlouisfed.org/blog/2020/09/check-processing-...
https://www.federalreserve.gov/newsevents/speech/bernanke201...