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On Fri 20 Apr 2018, SoylentNews published four criteria for analog currency and four criteria for digital currency.
On Mon 18 May 2018, Bank of England Staff Working Paper Number 725 by Michael Kumhof [former Stanford University economics professor] and Clare Noone [former Reserve Bank of Australia staffer] published four criteria for a Central Bank Digital Currency [CBDC]:
The core principles are: (i) CBDC pays an adjustable interest rate. (ii) CBDC and reserves are distinct, and not convertible into each other. (iii) No guaranteed, on-demand convertibility of bank deposits into CBDC at commercial banks (and therefore by implication at the central bank). (iv) The central bank issues CBDC only against eligible securities (principally government securities).
I'm not sure these count as four distinct criteria or that they are strong enough to be useful.
(Score: 3, Interesting) by requerdanos on Sunday June 03 2018, @05:35PM (1 child)
Yeah, this financial stuff is complicated for me too.
It isn't by people paying them "in credit" with promises, that's for sure. These agencies buy credit which is worth essentially nothing to its owners, except notionally (or they wouldn't sell it for pennies on the dollar), and then the collection agents pester those to whom the credit was originally extended, begging them to transfer to the agency something that *does* have value, such as (some representation of actual) money.
Even if they pay indirectly via some form of credit, such as a credit card or loan, it isn't the credit that the collection agency receives as payment (because that would be worthless), but the actual--watch this--corresponding convertible monetary value of that currency. (The lender in that case, not the collection agency, would then have a nice bucket of credit and good luck turning it into something of actual value.)
Yes. As I mentioned, currency doesn't necessarily need to have value to be popular or to be currency. Accounts receivable are worth what you can get for them, and the accounts themselves are worth precisely squat.
This can easily go off into existential territory. Something is worth so and so many ounces of gold--okay, that value fluctuates over time relative to your native physical coin. Does the value of the asset fluctuate, or is it the value of the gold that fluctuates, or just the value of the coin that's fluctuating? Do those questions have any meaning outside the context of being relative to each other? How does that affect the valuation of any of these things, or of other things you'd want to trade for them? It's all notional culturally, even if the traditions backing the notions are very strong.
Many cryptocoin exchanges, for example, give the value of a given currency in both bitcoin and in US dollars. (E.g., coinmarketcap is saying that Monero (XMR) is going for $172.57 USD or for 0.02242760 BTC.) But what do US dollars and bitcoin have to do with the value of Monero to, say, someone with a pocketful of rubles looking to invest in a fishing boat? Monero is not tied to any of the four (USD, BTC, RUB, Fishing Boats)--it's just a means in this case of turning a currency (the XMR) into more fixed, less liquid, non-currency assets in the form of fishing boats.
"Inter-temporal barter" is not a bad jargonization of trade with credit. It's called inter-temporal, I guess, because the thing that has actual value is given after some "temporal interval" has come and gone, and until the thing of actual value is received, all you've got is credit. If the credit had the actual value, of course, there would be no need for for us to talk about time travel to the point where the thing that has value is received. We would just shrug and say "what's the difference?" But we see the difference. One requires collection, and the other doesn't, as you yourself pointed out.
(Score: 1) by khallow on Monday June 04 2018, @04:23PM
Strongly disagree with that. It might not "need" the value, but being popular indicates it has value.