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Sunday, October 4, 2020
The ECB's digital euro: anonymous or not? — JP Koning
The European Central Bank (ECB) recently published a report that explores the idea of introducing a digital euro for use by the general public. This project is known as a central bank digital currency, or CBDC, and many other countries are exploring the same idea. John Kiff has a useful database here showing how far these projects have progressed.
Will the ECB's new euros-for-all be relatively open and anonymous like cash? Or will they require ID and permission like a bank account?
In short, the report says that anonymity may have to be "ruled out." It says that regulations do not allow anonymity in electronic payments, and the ECB must comply with regulations....
There’s a solution or at least partial solution to the anonymity problem which has been advocated by Positive Money and others for the last ten years. That’s to have commercial banks act as agents for the central bank.
I.e. you open your CBDC account at your commercial bank, which in turn remits all CBDC deposits to the central bank at the end of each working day (or withdraws money from the central bank if CBDC withdrawals exceed deposits).
Of course that’s a bit more risky in that the commercial bank bank might go bust before your money reaches the central bank. But that’s a risk some depositors might be willing to take to stop state employed bureaucrats keeping track of their CBDC holdings.
That’s to have commercial banks act as agents for the central bank. Ralph
No, since people should have the option of using commercial banks anyway, in addition to accounts at the Central Bank itself.
It's really simple Ralph; we need TWO payment systems: 1) the current, at-risk payment system that works through commercial banks. 2) an additional, inherently risk-free payment system that works through the Central Bank itself via accounts for all there.
Besides, commercial banks don't offer much privacy anyway, at least not from government.
Andrew, I agree that people should be free to use an "at-risk" payment system if they want, and that there should be a safe central bank system for those who want that.
Re your point that "commercial banks don't offer much privacy", I agree. As I said above, this is a "solution or partial solution". I.e. I'm not saying it's a PERFECT solution.
There’s a solution or at least partial solution to the anonymity problem which has been advocated by Positive Money and others for the last ten years. That’s to have commercial banks act as agents for the central bank.
ReplyDeleteI.e. you open your CBDC account at your commercial bank, which in turn remits all CBDC deposits to the central bank at the end of each working day (or withdraws money from the central bank if CBDC withdrawals exceed deposits).
Of course that’s a bit more risky in that the commercial bank bank might go bust before your money reaches the central bank. But that’s a risk some depositors might be willing to take to stop state employed bureaucrats keeping track of their CBDC holdings.
That’s to have commercial banks act as agents for the central bank. Ralph
ReplyDeleteNo, since people should have the option of using commercial banks anyway, in addition to accounts at the Central Bank itself.
It's really simple Ralph; we need TWO payment systems:
1) the current, at-risk payment system that works through commercial banks.
2) an additional, inherently risk-free payment system that works through the Central Bank itself via accounts for all there.
Besides, commercial banks don't offer much privacy anyway, at least not from government.
Andrew, I agree that people should be free to use an "at-risk" payment system if they want, and that there should be a safe central bank system for those who want that.
ReplyDeleteRe your point that "commercial banks don't offer much privacy", I agree. As I said above, this is a "solution or partial solution". I.e. I'm not saying it's a PERFECT solution.