The key reason bankers want digital currencies is so they can implement NEGATIVE interests rates and there would be nothing you can do to avoid it.
(currently interest rates are almost zero in many countries. But they could not go negative or people would withdraw the cash and keep it under their mattress. With CBDC - you wouldn’t have the cash option)
They have done this here in denmark, if you have over (i think) 250k dkr / 38k $. they acrue negative interrest. Not that you would ever see any positive anyway.
With a bond you would buy it for over face value (the dollar amount you receive when the bond matures), and the face value + interest received is less than what you paid for the bond (eg. you pay $101 for a $100 1 year bond at 0% interest which you hold until it matures: the bond yield is -1%).
With a bank account I assume they just take some percentage of the value of your account as a "fee".
Again, it's the voucher nature of the stuff. It can just quietly decline to be used for purchase of physical cash, or of fixed assets, or anything that lets you escape this combined vouchers-and-social-credit system that's being built.
I imagine any possibility of currency trading goes out the window as well, for the same reason: You're on ProleBucks™, now go spend what meagre money we've graciously decided to give you on an insect burger, pleb!
The "mattress problem" is solvable in paper money with a very simple mechanism: give paper notes an expiration date. Then you solve the negative interest rate problem by having the bank charge an "exchange fee" when you exchange them for new bills.
Then if you want to be a dick about it you make the "exchange fee" punitive to "encourage" people to not use paper money.
I don't think it's a problem either, but I also don't think that the existence of paper money is a barrier to negative interest rates. Because it's fiat, there's nothing stopping the issuer from voiding it.
The key reason bankers want digital currencies is so they can implement NEGATIVE interests rates and there would be nothing you can do to avoid it.
(currently interest rates are almost zero in many countries. But they could not go negative or people would withdraw the cash and keep it under their mattress. With CBDC - you wouldn’t have the cash option)
They have done this here in denmark, if you have over (i think) 250k dkr / 38k $. they acrue negative interrest. Not that you would ever see any positive anyway.
How exactly do negative interest rates work? After your bank scoping trace as a certain amount it loses money?
With a bond you would buy it for over face value (the dollar amount you receive when the bond matures), and the face value + interest received is less than what you paid for the bond (eg. you pay $101 for a $100 1 year bond at 0% interest which you hold until it matures: the bond yield is -1%).
With a bank account I assume they just take some percentage of the value of your account as a "fee".
By the way, functionally, this works as the bank charging you a percentage fee to look after your money.
I frankly don't know. Apparently the negative rates are mandated from the state bank/controller thing.
I wouldn't be surprised if the bank kept the money somehow.
Cash or anything else
Again, it's the voucher nature of the stuff. It can just quietly decline to be used for purchase of physical cash, or of fixed assets, or anything that lets you escape this combined vouchers-and-social-credit system that's being built.
I imagine any possibility of currency trading goes out the window as well, for the same reason: You're on ProleBucks™, now go spend what meagre money we've graciously decided to give you on an insect burger, pleb!
You are right. I never thought of that.
The "mattress problem" is solvable in paper money with a very simple mechanism: give paper notes an expiration date. Then you solve the negative interest rate problem by having the bank charge an "exchange fee" when you exchange them for new bills.
Then if you want to be a dick about it you make the "exchange fee" punitive to "encourage" people to not use paper money.
I personally don’t believe the “mattress problem” is a problem- humans who save and prepare for their future SHOULD be rewarded.
By creating massive amounts of inflation - central banks encourage wastefulness and short term mentality
I don't think it's a problem either, but I also don't think that the existence of paper money is a barrier to negative interest rates. Because it's fiat, there's nothing stopping the issuer from voiding it.
Ah- I misunderstood.
They kind of do this already by regularly replacing paper money designs - due to “security”