It'll also give the government the ability to add conditions to your money (ie. you need to spend X amount of yen / dollars this month or your money will expire and you'll lose it), or your money can only be spent at approved stores.
They can already take all your money. They can take it no matter what form you put it n in.
tell that to criminals and money launderers!
Some of China’s experiments with digital RMB have already done this where the money they handed out had an expiration date. Japan as well with the GoToTravel/GoToEat stimulus campaigns where the money equivalent could only be used at certain hotels/restaurants.
The idea that a government or bank would expire your money is pretty hilarious.
https://www.google.com/search?q=cbdc+expire
It doesnt take much knowledge of history to know that giving government full control over individual's money is a very bad idea.
The point of many CBDC electronic currencies is to reduce the barriers to this control, so restrictions on currency (such as expiring currency) can be implemented with a few keystrokes on a computer rather than, say, requiring everyone to turn in their cash and jewelry.
And governments already have full control over an individual's money.
> winners have until January 17 to spend their e-yuan before it expires
The caveat there is that expiration in this case is probably to encourage winners to spend the money/provide an end date to the experiment. Most likely regular e-money would not have that condition but special payments (ex: stimulus) could.
c.f. speed of yuan CBDC rollout; https://www.economist.com/the-world-ahead/2021/11/08/central...
c.f. central banks salivating at the prospect of having extra levers to pull: https://www.economist.com/the-economist-explains/2021/02/16/...
> An impediment to negative interest rates at the moment is that savers can switch to cash, which has a de facto interest rate of zero. In a cashless world central banks could in theory programme digital currency to have negative rates.
> Once ascendant, govcoins could become panopticons for the state to control citizens: think of instant e-fines for bad behaviour.
Those are second order digital money. They are not actual assets or liabilities on the central bank balance sheet. They are digital ious on a bank's balance sheet.
The difference here is that the asset and liability are moved directly onto the central bank balance sheet.
The reason this matters is because CBDCs are fundamentally about creating a hybrid fiscal /monetary policy tool that the central bank can use and allowing the central bank to digitally alter the balance sheet in a way that affects retail customers is the only thing that enables that.
As a side note, there is nothing which intrinsically ties these to crypto or block chain. You could implement this without either of those concepts.
With this new system I’d assume you transfer ownership of your money but it doesn’t need to have both banks connect directly, and there might be a chance to have it work offline as well.
How is this different? It precludes me from __ever__ having a tangible form of currency?
The point is not the digitalness but the decentralized part. One of the main participant in this system is railroads, and they already introduced a money equivalent offline system (Suica/Pasmo) that is wildly used in lieu of cash. As worded in the article they want to take it a step further and convert their “points” to actual legal tender.
A preponderance of big finance relies on trusted third-parties to intermediate transactions. Those third parties charge non-negligible fees to execute each and every transaction. Large value transactions can be done between untrusting parties directly, due to rigid cryptographic signing of the transaction record.
> Large value transactions can be done between untrusting parties directly...
What's the benefit of this when the bank has to accept a cleared record for a party to withdraw funds anyway?
Why would you want to depend on a central authority when you can have a network of trusted blockchain users all signing and broadcasting their transactions to each-other in real time, without an intermediary?
Why hamstring yourself with a database and the upgradability woes therein, when you can use a blockchain?
>What's the benefit of this when the bank has to accept a cleared record for a party to withdraw funds anyway?
With a permissioned blockchain, the funds can be cleared much faster (instantly?) than in the current system.
I left another comment about this. These technologies are very powerful and not thoroughly explored in a permissioned context for use by traditional finance.
You're already depending on a central authority to back your funds. So forcing a blockchain into the mix just introduces that additional complexity and risk, not a new dependency on a central authority.
> Why hamstring yourself with a database and the upgradability woes therein, when you can use a blockchain?
You're conflating "blockchain" with "distributed database". For example, a trivial example is a git repository storing ledger entries. It's distributed, can be used in an append-only fashion (and enforced at a higher layer), and such a system probably doesn't have the "upgradability woes" you're worried about. It's not a blockchain.
> With a permissioned blockchain, the funds can be cleared much faster (instantly?) than in the current system.
This can also be arranged without a blockchain.
The choice here is between:
1. A known intermediary with a physical address to which a judge/magistrate can have a summons mailed and which my local elected government officials can at least in principle regulate, or
2. An unknown number of unidentified intermediaries, at least some of whom are almost certainly beyond jurisdictional reach.
If I'm fucking around with gambling money, whatever. If we're talking about national payment infrastructure, the choice is obvious.
> [databases and] upgradability woes therein, when you can use a blockchain
...huh? I don't understand.
3. A consortium of permissioned parties. I'm assuming at least the 3 major banks and some if not all of the 70 companies.
This is similar to Diem (aka Facebook Libra). PoA (Proof-of-Authority) as opposed to PoW or PoS.
The point is that the parties keep each other in check, and collectively have some level of fault tolerance. At the scale of a national economy, it's desirable to not have a single point of failure on an institutional level.
If you think "Signed Git+Raft/Paxos", that's pretty close.
I'm curious if they'll allow some level of unpermissioned access to the chain and/or for individuals to manage their own keys. The pessimist in my thinks no, but one can dream.
Cryptocurrency validators are untrusted and the networks are unpermissioned.
Money on a blockchain isn’t necessarily cryptocurrency.
what can be done and what is done -- different. You might want to tell those companies that charge a fee to guarantee the transaction, that they can just trivially stop doing that now.
Something that gets floated periodically is the idea of creating a bank that only accepts deposits, and then sticks them in the Federal Reserve. This is sometimes called "narrow banking", and one of the more prominent efforts to do this involved a proposed bank called The Narrow Bank or TNB. (Alternatively, you could let individuals deposit money directly with the Fed.)
If implemented, such accounts would be 100% backed. You have a dollar, you put it in the account, it sits there until you ask for it back.
There's an article here: https://www.spglobal.com/marketintelligence/en/news-insights...
As it noted, US regulators seem strongly opposed, at least for now.
A better example would be in new zealand they truly have digital "NZ dollars" because anyone can transfer them to anyone for no fee.
You can't really do that with USD, you need an intermediary like Stripe, an attached bank account, ...
A bit like physical cash, it is backed by the gov, but you don't need to involve the gov to transfer it.