[BrianC]

The US Federal Reserve begins looking into its own digital currency
https://www.engadget.com/us-federal-res ... 34039.html
The US Federal Reserve took a step toward developing a digital currency as it announced plans to publish a research paper on the subject. The aim is to gather public comment and get the US play a "leading role" in the development of international standards, said Fed chairman Jerome Powell in a video message.

"To help stimulate broad conversation, the Federal Reserve Board will issue a discussion paper this summer outlining our current thinking on digital payments, with a particular focus on the benefits and risks associated with CBDC in the U.S. context," Powell said. "As part of this process, we will ask for public comment on issues related to payments, financial inclusion, data privacy, and information security."

The announcement takes the concept of a "digital dollar" from a small research project into something potentially larger. The Fed aims to explore how "central bank digital currencies" or CBDCs could fit into the US banking system.

At the same time, the Fed is likely trying to accelerate work toward a potential US digital currency as other nations, particularly China, are farther along. Last December, China announced that select users could spend digital yuan given out in a lottery-type experiment. Digital currency is seen as a way for a China to not just a way to bolster its own monetary system, but as a tool for soft power internationally.

To that end, Powell emphasized that while the US hasn't come to any conclusions on a digital dollar, "we expect to play a leading role in developing international standards for CBDBs," he said. That make take some time, however, as he added that the decision will require "careful thought and analysis" from the public and elected officials.

[Newfie]

Welcome aboard Brian.

I wonder what they will base the currency on. Bitcoin is based upon an algorithm, which makes it more tangible than a US dollar which is based not much.

It could he a retrenchment towards some “standard” (gold standard, algorithm standard) or it could be just more imaginary numbers.

[Outcast_Searcher]

I wonder what they will base the currency on. Bitcoin is based upon an algorithm, which makes it more tangible than a US dollar which is based not much.

It could he a retrenchment towards some “standard” (gold standard, algorithm standard) or it could be just more imaginary numbers.

I've read some articles on what the Fed has been doing, re a US stablecoin. At least it is carefully looking before leaping, so that's a start.

A key issue will be whether this is primarily about making instant purchases using "Fedcoin" or whatever it will be called, instant, safe, convenient, reliable, etc. -- or whether removing the complete FIAT nature of the US currency unit will be a part of it.

At the end of the day, I don't think the federal government will be willing to give up the money printing power it has (and how much short term power that gives key federal politicians) without a MAJOR fight. (But if we ever DID have a major hyper-inflationary dollar/debt "collapse", perhaps a Fedcoin which IS strictly limited, like BTC, could be the response, if implemented in a way the public could trust.)

So if they don't remove the "can make an infinite number of them" problem with fiat, I don't think it means much more than one no longer needs to wait 3 days for an ACH transaction to clear (or spend the fee and go through the hassle of making a bank wire transfer happen, and that's STILL not instantaneous as I understand it).

And there are a lot of hurdles for Fedcoin, et al. So everyone will need a digitial wallat, will need that to be completely reliable and ubiquitous technology. Hack proof, idiot proof, etc. Will it be insured against loss? There are a tremendous number of serious questions, and plenty of hurdles, before this would happen.

Oh, and would they then ban other crypto-currencies? Would they NEED to, as long as they are confident than can tax them, and track them against serious abuse by (at least) large scale criminals, if not all criminals?

I think it's VERY early days yet to seriously ponder what sorts of answers will be given to quite a few key questions on various issues.

[Newfie]

Thanks for that answer.

[BrianC]

The Fed Is Evaluating Whether To Launch a Digital Currency and In What Form (cnbc.com) 45
Posted by BeauHD on Wednesday September 22, 2021 @05:40PM from the everybody-is-doing-it dept.
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.

https://www.cnbc.com/2021/09/22/the-fed ... -says.html

[Plantagenet]

Whats the difference between the FED issuing new digital dollars and the FED trading regular old dollars electronically?



Cheers!

[Outcast_Searcher]

Whats the difference between the FED issuing new digital dollars and the FED trading regular old dollars electronically?

Cheers!

From what I've read, the major difference would be for normal citizens, or US residents using dollars, generally. The Fed would keep doing what it's doing, unless I'm missing something big.

Today, people are highly dependent on banks. Of course with modern internet banking, no big deal unless something (like major hacking or disruption with the internet) goes wrong, although many crypto proponents whine a lot about bank fees. Which I find amusing, given the massive average fees for BTC, Etherium, etc. (NO, I don't want to pay ten bucks or so, or even 5 bucks in FEES, to buy a $2 coffee, etc). My Amazon Visa, which pays ME 1% to 3% on EVERY purchase, and is FREE to me if I just pay my bill on time every month (happens automatically from my checking account) seems about 20,000 times better than that, frankly, considering bank accounts are protected by FDIC and for crypto hackers, there is NO protection at all.)

The main valid negative point I find re the banking system is how ponderous it is, and how the banking system has NEVER bothered to fix that, even as technology has advanced. ACH transactions still take 3 days on average (no guarantee for a max time, as I understand it). If the stock market can settle all stock and option transactions in one business day, the banks should be able to handle CASH settlements in that time at MAX).

[evilgenius]

Is this going to wind up in the same place where it did with the Chinese, banned? The West doesn't ban instruments, we imagine, but it can limit them. It can become too expensive to invest in Bitcoin.

It will be the malcontents who raise it up by its ears, if it goes there. It will come out leading them, as all of the anti-vaxxers celebrate on the White House lawn.

[theluckycountry]

The value of the currency they issue now is never of question, you buy a shovel this week you need $20, Next week another $20 out of your account or wallet. If we used rubbish like crypto for purchases no one would buy anything because they'd either be waiting their 'currency' to top out, or waiting for it to recover from a collapse before they spent any. The whole concept of crypto as a medium of exchange is laughable at best. How can you exchange when all you do is hodl.

[careinke]

Today, people are highly dependent on banks. Of course with modern internet banking, no big deal unless something (like major hacking or disruption with the internet) goes wrong, although many crypto proponents whine a lot about bank fees. Which I find amusing, given the massive average fees for BTC, Etherium, etc. (NO, I don't want to pay ten bucks or so, or even 5 bucks in FEES, to buy a $2 coffee, etc). My Amazon Visa, which pays ME 1% to 3% on EVERY purchase, and is FREE to me if I just pay my bill on time every month (happens automatically from my checking account) seems about 20,000 times better than that, frankly, considering bank accounts are protected by FDIC and for crypto hackers, there is NO protection at all.)

The main valid negative point I find re the banking system is how ponderous it is, and how the banking system has NEVER bothered to fix that, even as technology has advanced. ACH transactions still take 3 days on average (no guarantee for a max time, as I understand it). If the stock market can settle all stock and option transactions in one business day, the banks should be able to handle CASH settlements in that time at MAX).

Outcast, you need to catch up with the times. All your crypto concerns are being answered. You remind me of my grandmother telling me Dick Tracy watches were impossible, because there is no way all those vacuum tubes would fit on your wrist!

Here is a you tube video made three days ago showing; "Sending money from Chicago, USA to San Salvador, El Salvador over Twitter using the Strike API, bitcoin, and the Lightning Network." My understanding is the cost was less than a penny.
https://www.youtube.com/watch?v=fckmC8W6yF8

So, say goodbye to Western Union, and welcome to the Metaverse.

Peace

[Outcast_Searcher]

Today, people are highly dependent on banks. Of course with modern internet banking, no big deal unless something (like major hacking or disruption with the internet) goes wrong, although many crypto proponents whine a lot about bank fees. Which I find amusing, given the massive average fees for BTC, Etherium, etc. (NO, I don't want to pay ten bucks or so, or even 5 bucks in FEES, to buy a $2 coffee, etc). My Amazon Visa, which pays ME 1% to 3% on EVERY purchase, and is FREE to me if I just pay my bill on time every month (happens automatically from my checking account) seems about 20,000 times better than that, frankly, considering bank accounts are protected by FDIC and for crypto hackers, there is NO protection at all.)

The main valid negative point I find re the banking system is how ponderous it is, and how the banking system has NEVER bothered to fix that, even as technology has advanced. ACH transactions still take 3 days on average (no guarantee for a max time, as I understand it). If the stock market can settle all stock and option transactions in one business day, the banks should be able to handle CASH settlements in that time at MAX).

Outcast, you need to catch up with the times. All your crypto concerns are being answered. You remind me of my grandmother telling me Dick Tracy watches were impossible, because there is no way all those vacuum tubes would fit on your wrist!

Here is a you tube video made three days ago showing; "Sending money from Chicago, USA to San Salvador, El Salvador over Twitter using the Strike API, bitcoin, and the Lightning Network." My understanding is the cost was less than a penny.
https://www.youtube.com/watch?v=fckmC8W6yF8

So, say goodbye to Western Union, and welcome to the Metaverse.

Peace

1). So everything on Youtube is true? (There's an IMMENSE amount of crypto hype on Youtube et al, just like for meme stock "investing". If you believe all that stuff is true, good luck with that.)

2). So nothing can go wrong with such apps, API's, etc?

3). So no hacking can happen online for crypto accounts on exchanges, even though they've happened repeatedly and people have lost $billions over time, most of which is generally not recovered?

4). There are fees for using crypto to buy things and trading it on exchanges. For example:

https://www.cnbc.com/2021/03/02/op-ed-h ... -2017.html

https://hackernoon.com/5-hidden-costs-w ... 4f92232321

https://www.coindesk.com/tech/2021/02/2 ... tion-fees/

https://www.cointracker.io/blog/2019-cr ... comparison

On exchanges with no safety from hacking, no insurance on the crypto, etc.

Kind of ironic in the era of NO FEE stock trades and option trades commonly about fifty cents a stock option. And of course, federal SIPC insurance protection on brokerage accounts.

...

People are going to do what they want. I get it. Whether with politics, Covid-19, belief in conspiracy theories, etc.

If one wants to play wild west games with crypto for "free", good luck with that. Until it's regulated well and safe from hacking or at least insured from hacking loss, I'll pass.

I'll just have to struggle along with using a credit card that pays me every time I use it, "painful" as that may be. Oh, and if there's a problem with that, like from thieves (which seems to happen no more with chipped credit cards), all it costs me is a bit of time to point out the theft to the bank. Worst case, to document it on a short form for the bank.

Just because you say the concerns "are being answered" doesn't mean the answers are safe ones or good ones. Hopefully, at some point they will be.

OTOH, at some point most major countries might ban cryptocurrencies or make them illegal if they can't continue to tax them effectively. China certainly has rained hard on that parade already.

Time will tell.

[BrianC]

New Zealand Might Launch Its Own Digital Currency (yahoo.com) 30
Posted by EditorDavid on Sunday October 03, 2021 @11:34PM from the Kiwi-currency dept.
"New Zealand's central bank is exploring the possibility of issuing a digital currency, saying the benefits it would bring include its potential use as a monetary policy tool," reports Bloomberg. The central bank cites "the declining use, acceptance and availability of cash in New Zealand, and emerging innovations in private money, namely stablecoins."
While developing a central bank digital currency would require long lead times given the complexities and involve a multi-stage approach, the Royal Bank of New Zealand (RBNZ) said it broadly favors the idea. A digital currency should support the New Zealand dollar "as our single unit of account" and be exchanged 1-for-1 with cash, it said, adding "cash is here to stay for as long as some of us need it."

The RBNZ said a digital currency would support the value anchor role of central bank money by:

- Providing individuals and businesses with the option of converting privately issued money into a digital form of central bank money, ensuring the long-term convertibility of private money into central bank money

- Improving the technological form of central bank money to ensure it remains relevant in a digital future

- Providing an additional monetary policy tool by it being either issued to provide monetary stimulus, or interest bearing....

Other central banks around the world, including the European Central Bank, are also exploring the possibility of issuing a digital currency. https://finance.yahoo.com/news/zealand- ... 49036.html