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why do CBDC? SEPA/SEPA Instant already exists and can clear payments just fine without involving VISA/Mastercard. Will people recieve salary in this digital Euro account? probably not because banks lobby, they want cheap funding source i.e. customer deposits. most people wouldn’t want it since there is no interest paid (compared to tiny to moderate interest in savings accounts), you don’t have card even as an option. Like I don’t mind ppl using central bank liabilities for payments but the entire capitalist financial infrastructure is built around commercial banks. its just inconvenient having to transfer money between commercial bank and ECB wallets.
It won’t destabilize existing financial system or result in bank runs, all banks in the Eurozone are ultimately backstopped by the ECB. bank lending isn’t reserve constrained, it is true that losing cheap deposits may reduce profitability of banks, but that’s it. they will be able to lend just fine because of ECB’s LTROs, TLTROs etc.
the privacy argument against CBDCs is silly though. Commercial banks ultimately work because of Government, they use Government money for clearing. Governments can just ask them for your data if needed.
Subsidize SEPA/SEPA Instant. Make it free, a public service. Market it by using the said arguments, people will use it more then. Maybe even force banks to issue cards like Mir in Russia or Unionpay in China.
As said, this will not replace physical money. And there is nothing with the digital one they couldn’t do already. Not really sure what is the scare about.
Sounds like a good idea. The only downfalls/speed bumps I’m seeing mentioned is that to increase the transaction speed the amount of data carried is limited, which doesn’t allow for the same securities.
Not sure if it’s legitimate fears or not. I hadn’t heard of it till you mentioned this.
Thanks for mentioning it though, it’ll be cool to see if it goes that way
why do CBDC? SEPA/SEPA Instant already exists and can clear payments just fine without involving VISA/Mastercard. Will people recieve salary in this digital Euro account? probably not because banks lobby, they want cheap funding source i.e. customer deposits. most people wouldn’t want it since there is no interest paid (compared to tiny to moderate interest in savings accounts), you don’t have card even as an option. Like I don’t mind ppl using central bank liabilities for payments but the entire capitalist financial infrastructure is built around commercial banks. its just inconvenient having to transfer money between commercial bank and ECB wallets.
It won’t destabilize existing financial system or result in bank runs, all banks in the Eurozone are ultimately backstopped by the ECB. bank lending isn’t reserve constrained, it is true that losing cheap deposits may reduce profitability of banks, but that’s it. they will be able to lend just fine because of ECB’s LTROs, TLTROs etc.
the privacy argument against CBDCs is silly though. Commercial banks ultimately work because of Government, they use Government money for clearing. Governments can just ask them for your data if needed.
Subsidize SEPA/SEPA Instant. Make it free, a public service. Market it by using the said arguments, people will use it more then. Maybe even force banks to issue cards like Mir in Russia or Unionpay in China.
Plus, a government can’t track or earmark money. With a digital euro, they gain much more control over how you are allowed to spend your money.
Considering the autocracy trend, the timing is “unfortunate”.
As said, this will not replace physical money. And there is nothing with the digital one they couldn’t do already. Not really sure what is the scare about.
You have obviously never driven change in an organization.
You don’t claim to change everything on day one. You say: “people will have the choice”.
Then, you reduce the choices. Your taxes? They have to be in digital euros.
Then, you increase the scope. Purchases over 50k? Digital euros. It’s only a minority of transactions anyway.
Then, you lower the bar. Anything above 10k.
Then, you reduce the printing of physical money (lower values) and you say: “digital euros are more convenient anyway”.
The digital euro is going in pair with the new privacy laws.
Sounds like a good idea. The only downfalls/speed bumps I’m seeing mentioned is that to increase the transaction speed the amount of data carried is limited, which doesn’t allow for the same securities.
Not sure if it’s legitimate fears or not. I hadn’t heard of it till you mentioned this.
Thanks for mentioning it though, it’ll be cool to see if it goes that way
https://www.flagright.com/post/mandatory-sepa-instant-payments-real-time-compliance#%3A~%3Atext=The+Finextra+survey+found+more%2Cto+avoid+delaying+customers'+payments.