A bank doing stablecoins will still need to implement these controls.
Stablecoins only really work because they are outside the system.
You'd have an account at the ECB that you can keep your digital euros in and exchange to and for liquid euros. You'd get the ECB interest rate.
Then if banks want to convince you to hold your eurocoin on their wallet / exchange / stake it, they'd have to offer better features and better interest than the ECB.
Sadly banks are in full swing trying to torpedo the proposal with lobbying, to the point where there's a lot of noise about the ECB only being allowed to be a facilitator and not allowed to be actual competition to the bank, and instead it's banks that should get the sole right to hold digital euro accounts.
> But we enjoy pretty advanced banking services and arguably the most flourishing fintech ecosystem by worldwide standards
Interestingly enough the US does have very modern financial institutions: credit unions. An American woman I met in Vietnam and traveled together with for a bit had a Charles Schwab account that had more features, more free overseas withdrawals and a nicer mobile app than my Dutch bank. It was almost on par with Revolut / N26 / Bunq.
Charles Schwab is the 12th largest bank in the US by assets.
I do agree that credit unions can be great, however, the experience between them is wildly inconsistent. Some have apps that barely work, and some have decent apps that are a bit dated and clunky. The big banks generally have the best UX/support/etc.
It's weird to call it a "digital euro" because the euro is already digitized by traditional banks! At an existing traditional bank, your balance is already a discrete number. Money can be sent and received electronically on communications networks without using physical media like coins and bills and cheques.
1) Is that automatically good? Damn those capitalists and their slow and steady approach to major changes, I suppose. Wouldn't want to proceed too thoughtfully.
2) The free market in banking looks pretty much exactly like the crypto ecosystem. As people often put it, speedrunning banking history. The only thing slowing the financial institutions down is the regulation (which is pretty much the pro-regulation argument of "if we don't regulate it they'll do a bunch of stupid things too quickly").
There isn't something of a free market in banking but the limitations are extreme enough that it is more of a heavily mixed to centralised one. Interest rates are managed by a central committee and banks provide any colour of service you like as long as it is black. Typically heavy KYC regulations to link the system to law enforcement and state intelligence systems. There is enough freedom to keep the fees fair and a bit of flexibility in what the money gets invested in which is pretty good. But for transaction speed I'd actually be a little surprised if the banks were allowed to control their own settlement timelines; I assume going to quickly would start running in to KYC-style compliance problems.
Considering how long it’s taken even the most progressive regulations to be enacted, it’s arguable that we’ve done anything but proceed without thoughtfulness towards how these changes affect the other 99% of the population.
We sure do spend a lot of time letting the wealthiest folks skim those points off the top without spending any more than they are required to by regulations, though.
However, there's FedNow immediate transfers, Zelle (consortium of banks) immediate transfers, same day ach (several batches daily), same day fed wire transfers within banking hours, and that's just the faster options.
Decentralized systemd are slow to act and slow to change, which is why all of the faster banking initiatives tend to involve a centralized element.
Presumably she'd need to exchange it for cash since retail acceptance of crypto is pretty low, and the local exchange place that takes WhateverStablecoin and hands out cash is going to take some commission. And at that point it seems like we've just reinvented Western Union or Moneygram.
In your view is the advantage of the hypothetical stablecoin way of doing this that it exists outside of the money-transfer provider ecosystem until its actually exchanged?
So what banks do is become increasingly paranoid about who they will they bank, meaning anyone who falls into the "high risk" category, is extrajudicially punished through systemically high risks of being debanked. In this way, the state can punish certain groups without due process.
The mechanism often involves correspondent banks, and is generally pretty expensive ($25-$65).
For scale, we’re talking about transfer fees measured in cents with stablecoins.
I don’t see how crypto boosters get around the fact that more than 0% of regulations are legitimately desired by most of the world. And those require some non zero amount of bureaucracy and money to enforce.
> I don’t see how crypto boosters get around the fact that more than 0% of regulations are legitimately desired by most of the world. And those require some non zero amount of bureaucracy and money to enforce.
Taking the statement literally as-is: Yes, a strictly > 0 amount of overhead is required to perform said compliance activities.
But the overhead similarly can *never* be 100% of the money being transferred over. And right now, the transfer costs have only ever been shown to grow, and never shrink in isolation. They only shrink when a new competitor comes in to provide said service, which has rarely ever happened because of said regulations that progressively saddle them with more requirements.
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> I don’t see how crypto boosters get around the fact that more than 0% of regulations are legitimately desired by most of the world. And those require some non zero amount of bureaucracy and money to enforce.
Interpreting this emotionally:
You're leaving out the implicitly-made conclusion that most pro-crypto people will make: That the current banking system *has* to be accepted as-is, useless systems & fee-draining & all that jazz, *and* that they should just take it.
You've already lost all attempts to convince them with that rhetoric. By not putting in more clarifying statements, the gaps have been filled in with the negative implications that will turn them away from supporting your view.
It will be seen by pro-crypto people as own-side points scoring.
In many cases you can now transfer money instantly and free across European countries. If there’s a will there’s a way.
Turning crypto into an acceptable banking system is probably just as hard, if not harder, than making the existing banking system better, faster and more user friendly.
We’ve been promised crypto would revolutionise payment for more than a decade now. In the same timespan I’ve seen my little country develop a common payment app shared by all banks which has made payment to shops and between people instant and super easy. We didn’t need crypto to make progress.
If banking regulations were relaxed to the point where crypto could be used more widely, traditional banks would also be able to innovate much more quickly without crypto.
In the end, I don’t find it entirely unlikely that banks may use a blockchain to do some of their international settlement. It’s a nice algorithm in the cases where you don’t want a single master arbiter. But it’ll probably be a fairly boring behind-the-scenes kind of thing.
If the big US banks are successful, they can have their own one huge fractional reserve that can be used by people around the world.
While the wording was imprecise, actually this is what banks are doing: Creating loans, based on the deposits of customers.
Private banks create money by extending credit, that's it. They worry later about reserve requirements, which in the case of USD or EUR are extremely low.
And I still don't understand how this relevant in any way to the topic.
They are expanding credit, but they need customer funds on the central banking level to actually move away the money the created on their local core banking; thats the reason why banks needs customer funds: Without them, their central bank account would be empty and they couldnt transfer any money that they created. the question regarding minimum reserve is another angle and not relevant to the question of how money is technically created and then transfered.
EDIT: for sure, they can also acquire central bank money as a credit to make the payments transfer happen, but usually its more easier and convenient to use customer funds instead of borrowing from the central bank or on the interbank level