Public Utility Postal Banking and RTGS for All
July 11, 2017 6:09 AM   Subscribe

Accounts at the central bank: technical policy choice, or a right? - "There will come a point when comprehension that offering digital accounts with the central bank is possible becomes widespread. Then, the discussion about whether it should do so may change gear somewhat."
In the future, the discussion may revolve around whether or not such accounts, if they can be provided at relatively low cost, should not be a right of citizens... with the functionality of individuals being able to authorise transfers from one account holder to another. Since this can be done, people may come to what justifies excluding all but the large elite financial institutions – those who happened to have caused society so much bother recently – from enjoying the privilege of central bank accounts.
Matt Levine: "If you are a central bank, your basic job is to keep an electronic list of who has dollars or pounds or whatever, so you might be particularly interested in new ways of keeping electronic lists of who has money." Matt Levine: "Money, financial instruments, the right of the state to tax its citizens -- at some level these are delusions. It's just that they are collective delusions; because we all believe in them, they work. They are what Yuval Noah Harari calls an 'imagined reality': 'something that everyone believes in, and as long as this communal belief persists, the imagined reality exerts force in the world'. 'Politics', writes David Graeber, 'is that dimension of social life in which things really do become true if enough people believe them'. Money shares in that character. That means that Shrout's project is not purely silly. 'If you could convince everyone in the entire world that you were King of France', writes Graeber, 'then you would actually be the King of France'. If Shrout could convince enough people that the state has no power to tax them, then the state would have no power to tax them. If he could convince enough people that his $100 trillion of paper was money, it would be money." History of money debunks notion of stateless currencies - "While private banks create most of the money supply these days, the ultimate political authority still provides the ultimate guarantee of monetary value... the control of money is political, rather than technical... there is nothing natural or inevitable about letting profit-seeking private banks control the money supply."

The smart money: are we on the cusp of a cashless society? - "Money's future, like its past, will be divided and uneven. Our central concern should be not with its technology, but with the political and legal frameworks within which it operates."

Worldpay emerges as a winner in the war on cash - "Payments have long been a backwater of finance, pleasantly profitable yet unexciting. All that is changing. The trend for people to pay for more things on cards and mobile devices has produced a spurt of growth in this once-staid sector... 'It is a snowball effect, because this is a network business, which used to be based on bricks and mortar and now has huge innovation pushed on to it', he adds. 'In the payments market all roads lead to technology.'"

The road to sound digital money - "No, I'm not talking about sound money in the sense of having a stable value. I'm talking about money that is sound because it can survive natural disasters, human error, terrorist attacks, and invasions. Kermit Schoenholtz & Stephen Cecchetti, Tony Yates, and Michael Bordo & Andrew Levin (pdf) have all recently written about the idea of CBDC, or central bank digital currency, a new type of central bank-issued money for use by the public that may eventually displace banknotes and coin...I don't want to pick on them too much, but all these authors are describing a particular implementation of central bank digital money: account-based digital money. There's an entirely different way to design a CBDC, as digital bearer tokens. My guess is that the authors omit this distinction because macroeconomists tend to abstract away from the differences between various types of money. Cash, coins, deposits, and cheques are all just a form of M in their equations. But if you get into the nitty gritty, bearer tokens and accounts are two very different beasts." China's Central Bank Has Begun Cautiously Testing a Digital Currency
One of the main concerns voiced by other central banks looking at digital fiat currencies is that they could undermine the commercial banking system by making it possible for anyone to have an account with the central bank.

China’s digital currency is designed to avoid this problem. In a paper published in Tsinghua Financial Review, an academic journal, and posted online recently, Yao Qian, deputy director of the Technology Department of the People’s Bank of China, wrote that a digital currency could be integrated into the existing banking system, with commercial banks operating digital wallets for the central bank’s currency.

And while other countries have proposed following Bitcoin’s architecture and many of the largest banks in the world are experimenting with it, the currency developed by the People’s Bank of China is also different in design.

Yao writes that the currency would only use a distributed ledger in a limited way. A blockchain might not be used to process transactions, as this could prove an insurmountable bottleneck for a currency with such a huge transaction volume as the renminbi. But such a distributed ledger might be used to periodically check who owns what. “The ownership of digital currency can be verified directly by the issuing bank, so as to realize peer-to-peer cash transaction[s],” Yao writes.
Bank of England to set out plans to open up interbank payments - "The BoE wants to allow a variety of financial firms to compete with the major high street banks that currently have access to the high-speed payments system, which handles 500 billion pounds ($647 billion) of transactions a day. The reforms are also designed to lessen financial stability risks like hacking and fraud, highlighted last month by BoE officials as weak points of the current set-up. A major outage of the BoE's Real-Time Gross Settlement (RTGS) system in 2014 put Britain's financial infrastructure in the spotlight... The central bank also confirmed the new system would be designed so it can link in future with distributed ledger technology, which underpins digital currencies like Bitcoin. The new system will be designed to operate five days a week and almost 24 hours a day, and could be upgraded to a 24/7 operation if there was demand. The BoE said it aimed to roll out most of the upgrades by the end of 2020."

ECB to develop real time money transfer service - "The European Central Bank will develop an instant payment settlement service by late next year to facilitate real-time money transfer of small scale transactions, the ECB said in a statement. Real time transfer facilities are already available for large volume payments but the new service, set to start operating in November 2018, would expand this to all transfers, including retail transactions, at a marginal cost."
posted by kliuless (12 comments total) 27 users marked this as a favorite
 
sound digital money

This money, it vibrates?

Thanks, kliuless. Much appreciated.
posted by flabdablet at 6:36 AM on July 11, 2017 [1 favorite]


I'm too far behind on my monetary policy reading as is. Now I'm further behind. Great.

(I mean, thanks kliuless, as always)
posted by PMdixon at 7:52 AM on July 11, 2017 [1 favorite]


Kliuless' posts are one of my fave notifications to receive. If you're interested in this, give GNU Taler a look, as it allows taxation while not destroying the privacy (and to a degree, security, and therefore usefulness) of the cryptocurrency.
posted by eclectist at 8:05 AM on July 11, 2017 [2 favorites]


I was just at an Ethereum meetup and discovered that all you need for an ICP is to clone a github repository. Can we do mificoin? Come     On     Gang,     Let's     Make     A    Show    Million
posted by sammyo at 8:25 AM on July 11, 2017


Surely the best ICP will be Insane Clown Phiat.
posted by idiopath at 8:42 AM on July 11, 2017 [1 favorite]


OK - reality is already crazier than I am there is already a Juggalo cryptocurrency.
posted by idiopath at 11:52 AM on July 11, 2017 [4 favorites]


An objective and marked improvement.
posted by ckape at 3:16 PM on July 11, 2017 [3 favorites]


Bank of England successfully tests new payment method - "The test did not involve real money, nor any of the BoE's core systems, or even use blockchain technology itself... The BoE tested whether it could synchronise a multimillion-pound wholesale payment passing from its own settlement system, known as the Real-Time Gross Settlement (RTGS), to another central bank's core system. The central bank said it set up two simulated RTGS systems on a cloud computing platform, using the Ripple interledger to simultaneously process 'a successful cross-border payment.'"

fwiw...
Tulips, Myths, and Cryptocurrencies - "Early on in Sapiens: A Brief History of Humankind, Yuval Noah Harari explains the importance of myth."
Once the threshold of 150 individuals is crossed, things can no longer work [on the basis of intimate relations]…How did Homo sapiens manage to cross this critical threshold, eventually founding cities comprising tens of thousands of inhabitants and empires ruling hundreds of millions? The secret was probably the appearance of fiction. Large numbers of strangers can cooperate successfully by believing in common myths.

Any large-scale human cooperation — whether a modern state, a medieval church, an ancient city or an archaic tribe — is rooted in common myths that exist only in people’s collective imagination. Churches are rooted in common religious myths. Two Catholics who have never met can nevertheless go together on crusade or pool funds to build a hospital because they both believe that God was incarnated in human flesh and allowed Himself to be crucified to redeem our sins. States are rooted in common national myths. Two Serbs who have never met might risk their lives to save one another because both believe in the existence of the Serbian nation, the Serbian homeland and the Serbian flag. Judicial systems are rooted in common legal myths. Two lawyers who have never met can nevertheless combine efforts to defend a complete stranger because they both believe in the existence of laws, justice, human rights – and the money paid out in fees. Yet none of these things exists outside the stories that people invent and tell one another. There are no gods in the universe, no nations, no money, no human rights, no laws, and no justice outside the common imagination of human beings.
also btw...
-Dragon-Slayers
-How economics became a religion [1,2]
-3 Things I've Learned Since the Financial Crisis
posted by kliuless at 6:19 AM on July 12, 2017 [3 favorites]


RTGS makes liquidity crises worse so it makes sense that it needs some blockchain magic.
posted by PMdixon at 10:57 AM on July 12, 2017


“Digital disease” and the cure for it: Why the Kremlin has gotten interested in cryptocurrencies
posted by Kabanos at 11:18 AM on July 13, 2017


-Money in an economy without banks
-How did usury stop being a sin and become respectable finance?
posted by kliuless at 5:55 AM on July 14, 2017


Don Quijones: People Not Amused by EU Efforts to "De-Cash" their Lives - "Of course, there are many other reasons to worry about living in a cashless (or 'less cash') society that were not offered as an option in the survey, including the vastly increased power it would give to political and monetary authorities as well as the near-impossibility of ever escaping from the clutches of the banking system or central banks' monetary experiments."

Visa Boldly Ushers in the Cashless Future (Where Everyone Uses Visa) - "Independent businesses don't like credit card companies. According to a 2016 survey of independent retailers conducted by the Institute for Local Self-Reliance, the median share of revenue spent on swipe fees was 3 percent. Small businesses pay more in swipe fees than they make in profit in many cases, ILSR co-director Stacy Mitchell said, meaning that the banks and payment companies make more money from those businesses than the owners do. Not surprisingly, the survey found strong support for a federal cap on swipe fees, which add up to more than $50 billion a year for U.S. retailers. Most European countries have caps on interchange fees, which creates an incentive for merchants to embrace the shift towards card payments." [1,2]

Going Cashless? Bad for Tax Cheats, Privacy, Poor
In a digital-only economy, governments and banks could take control of your financial life; with a flick of a switch, they could leave you without a penny. Networks can fail. You could lose your mobile phone. And everybody could be vulnerable to a cyber attack or power outage, which is why the U.S. government encourages citizens to keep some cash on hand for emergencies...

Billions of poor people in the developing world depend on cash to buy goods for very small amounts, often mere cents. It may be too costly to host those transactions on a network. That could create a second-class citizenry of people who don't have equal access to banking services. In India, millions of new savings accounts opened under a financial-inclusion plan remain inactive, because banks find ways to cap free transactions and charge the poor for the services. Even in the U.S., cash is used for more than 60 percent of purchases under $10, according to the Federal Reserve. On the other hand, services like Paytm in India and mobile-phone networks such as Kenya's M-Pesa show how the poor can benefit. People in remote villages, who have never entered a bank branch in their lives, are embracing the digital economy, going beyond day-to-day transactions to try out newer services like micro-business loans.
In Urban China, Cash Is Rapidly Becoming Obsolete - "There are some potential future problems with China’s sweeping embrace of online payments. As the country builds its entire consumer economy around two private smartphone payment platforms, it is slowly locking out people unable to get onto those networks, and locking itself into those companies."

If blockchains ran the world: Disrupting the trust business
It would not be the first time a novel form of list-making changed the world. More than 500 years ago a new accounting technique, later known as double-entry book-keeping, emerged in northern Italy. It was a big step in the development of the modern company and economy. Werner Sombart, a German sociologist who died in 1941, argued that double-entry book-keeping marked the birth of capitalism. It allowed people other than the owner of a business to keep track of its finances.

If double-entry book-keeping freed accounting from the merchant’s head, the blockchain frees it from the confines of an organisation... When Luca Pacioli, a Franciscan friar, wrote the first textbook on double-entry book-keeping in the late 15th century, he could not have foretold what the accounting technique would bring about... If even objects control their own destiny, what is left for governments and the nation state to do? Plenty, it turns out. Despite libertarian dreams of complete decentralisation, in many cases somebody still has to make sure that the information baked into a blockchain is actually true.
Jeremy Rifkin interview: 'Third Industrial Revolution'
Facebook's a wonderful, incredible way to bring humanity together. They've brought together 2 billion people in the largest fictional family in history. So young people are starting to empathize with each other through Facebook across the globe. This is wonderful. However, when everyone needs Facebook because it's so successful that everyone's on it, then it starts to look like a global public utility, a public good. Same with Amazon.

So then the question becomes, what did we do in the 20th century when there were certain success stories that became so successful that they became a public good, that everyone needed and no one could do without? So what did we do?

In some countries, they became public utilities. The government took them. In the US, we kept most of it private but we regulated them as public goods. AT&T is a classic example. We finally said, this is a public good and everyone needs it, so the government will regulate it — keep it in private realm, which is good, but regulate access — regulate people's ability to use it, regulate the charges they could have, even regulate that some of their income, a good amount of it, has to go into research that's openly available for the public good. And AT&T research built so many of the things we use now: from the research that went into computers, to creating photovoltaic solar cells — that all came out of Bell Labs. And it still stayed private. I think once they're regulated as utilities, then questions of addressing for the public good, fake news, and all of the issues that go along with that can be addressed. The public has a responsibility to do that, the citizenry of a country — and that's where government comes in.

If you just leave it in kind of a libertarian marketplace, then you're relying on a handful of people in these companies to actually be responsible for the public good. That's too big of a responsibility to place on a handful of people at Google, Facebook, Twitter, and Amazon.

I think their success has been terrific. I really do. But I also think it's naive to believe that there won't be this global regulation. These issues will be addressed. If I were Mark Zuckerberg or any of these guys, I would say, "My God. How does the world expect us to deal with this?" I mean, it's too big a responsibility; I think they're going to welcome this. They'll maybe keep it in the private sector, but they'll welcome some form of regulatory operation because they've been so successful that they are a global, public good. Everyone needs them.
Ends, Means, and Antitrust - "The United States and European Union have, at least since the Reagan Administration, differed on this point: the U.S. is primarily concerned with consumer welfare, and the primary proxy is price. In other words, as long as prices do not increase — or even better, decrease — there is, by definition, no illegal behavior. The European Commission, on the other hand, is explicitly focused on competition: monopolistic behavior is presumed to be illegal if it restricts competitors which, in the theoretical long run, hurts consumers by restricting innovation." [1,2]

Intriguing experiment reveals a fundamental conflict in human culture - "It's well known among economists that most people don't like income disparities, especially when they're on the lower rungs of the economic ladder. This is reflected in polls and scientific studies, but also just everyday common sense. Yet many of our societies suffer from a widening gap between the haves and have-nots. If we hate economic inequality so much, why do humans keep supporting institutions that concentrate wealth in a tiny percentage of the population? A new cross-cultural study led by economists working in China suggests one possible reason: people are not willing to redistribute wealth if they think it will upset the social hierarchy."
posted by kliuless at 4:44 AM on July 19, 2017


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