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Former U.S. Regulator Leads Effort to Create Digital Dollar

posted by martyb on Thursday January 23 2020, @09:59AM   Printer-friendly
from the all-the-better-to-track-you-with dept.

Arthur T Knackerbracket has found the following story:

The former chair of the Commodity Future Trading Commission (CFTC) has partnered with Accenture to create the non-profit Digital Dollar Project, which plans to explore the creation of a U.S. Central Bank Digital Currency (CBDC).

“The digital 21st century is underserved by an analogue reserve currency,” said Chris Giancarlo, former CFTC chair under Presidents Barack Obama and Donald Trump. “A digital dollar would help future-proof the greenback and allow individuals and global enterprises to make payments in dollars irrespective of space and time.

The purpose of the Digital Dollar Project is to encourage research and public discussion on the potential advantages of a digital dollar, convene private sector thought leaders and actors, and propose possible models to support the public sector. The Project will develop a framework for practical steps that can be taken to establish a dollar-based CBDC.

A cryptocurrency backed by a fiat cash is known as a stablecoin.

A “tokenized” U.S. currency would coexist with other Federal Reserve liabilities and serve as a settlement medium to meet the demands of the digital world and a cheaper, faster and more inclusive global financial system, Giancarlo added in a statement.

[...] The U.S. dollar is the world’s “reserve currency” because it represents about 58% of all foreign exchange reserves in the world, according to the International Monetary Fund (IMF). Additionally, 40% of the world’s debt is denominated in dollars.

Some experts believe the U.S. dollar could fall behind as the defacto ecommerce currency if other nations launch state-sponsored stablecoin first.

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  • (Score: 3, Interesting) by fyngyrz on Thursday January 23 2020, @02:40PM (7 children)

    by fyngyrz (6567) on Thursday January 23 2020, @02:40PM (#947408) Journal

    What is the advantage of this?

    Pros:

    • Unauthorized actors such as thieves must actually mug you rather than just stealing from you, because such currencies could require PINs, passwords, etc.
    • Could be designed to be backed up, transferrable from wallet A to wallet B by invalidating authorization A and validating authorization B, hence un-losable
    • Easier to transfer beyond local scope — to your college kid, for instance
    • Similar to credit and debit cards, reduces cash-on-hand risks for merchants
    • Mintless — less expensive, somewhat environmentally friendly
      Lighter
    • Less bulky

    Cons:

    • For any currency that would otherwise be in your physical possession that transforms from banknotes into virtual, non-actual-possession entities, it becomes possible for authorized actors such as creditors and the IRS to remove them forthwith, no matter where you are. This could be ameliorated by digital wallets that do not have an online component... could.
    • Trackable: shadow economy adversely affected
    • Un-collectable — collectors saddened
    • Un-flashable — pimps saddened

    --
    Even Chuck Norris stays off my lawn.

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  • (Score: 4, Insightful) by c0lo on Thursday January 23 2020, @03:13PM

    by c0lo (156) Subscriber Badge on Thursday January 23 2020, @03:13PM (#947435) Journal

    Cons: as with any hitech sophisticated solution, if internet and/or power go down, you are fucked for the duration of the outage. Think natural disasters: hurricanes, floods, bushfires, Tony Abbott, Trump's reelection, Breentry, etc

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  • (Score: 1, Insightful) by Anonymous Coward on Thursday January 23 2020, @04:08PM (5 children)

    by Anonymous Coward on Thursday January 23 2020, @04:08PM (#947475)

    I don't see any difference between your pros and using a debit/credit card.

    • (Score: 2, Informative) by nitehawk214 on Thursday January 23 2020, @06:43PM (3 children)

      by nitehawk214 (1304) on Thursday January 23 2020, @06:43PM (#947546)

      Different people get the money for the use. Instead of Credit Card companies, it would be the Federal Reserve... or likely some private entity that directs money into Chris Giancarlo and his friend's pockets.

      --
      "Don't you ever miss the days when you used to be nostalgic?" -Loiosh

      • (Score: 2) by barbara hudson on Friday January 24 2020, @12:02AM (2 children)

        by barbara hudson (6443) <barbara.Jane.hudson@icloud.com> on Friday January 24 2020, @12:02AM (#947685) Journal
        And yet when I spend cash nobody gets a cut for "enabling the transaction " - the merchant gets it all. Large merchants issue their own cards to capture those fees.
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        • (Score: 2) by ElizabethGreene on Friday January 24 2020, @01:41AM (1 child)

          by ElizabethGreene (6748) Subscriber Badge on Friday January 24 2020, @01:41AM (#947738) Journal

          This may come as a surprise, but at anything larger than tiny scales cash handling actually isn't free. It has nontrivial overhead costs from counting, storing, transporting, depositing, shrink, buying change, etc.

          It's not as expensive as dealing with chargebacks and other credit card fuckwittery, but it is very much not free.

          I was surprised to learn this too.

          • (Score: 2) by barbara hudson on Friday January 24 2020, @01:55AM

            by barbara hudson (6443) <barbara.Jane.hudson@icloud.com> on Friday January 24 2020, @01:55AM (#947752) Journal

            Merchants generally like cash. Even large amounts. That 2% - 3% credit card surcharge adds up really quickly. And when they get dinged extra for credit-card-imposed "cashback" schemes that are paid by the retailer and not the credit card company (contrary to public perception) you can end up losing money on cc transactions with tight margins, or lose even more with loss leaders.

            A store doing a quarter million a day can end up losing $10k or more on cashback schemes, transaction fees, etc. Calling the armoured car guys for a quick pickup doesn't cost that.

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    • (Score: 0) by Anonymous Coward on Thursday January 23 2020, @07:49PM

      by Anonymous Coward on Thursday January 23 2020, @07:49PM (#947582)

      Honestly, the cons list is pretty similar as well.