ECB plans for a digital euro

Brendan Burgess said:
I think that many users will prefer the security of a debit card issued by a bank
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And the "cash is king" people have already decided this is a globalist conspiracy to trap them in a 15 minute city. Sad, because it backs up the more rational side of their arguments which doesn't want banks getting a cut of their transactions.
 
Brendan Burgess said:
Most of us actually do report our own experience. We do not commission MRBI to do a survey before we post on Askaboutmoney!
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A quick glance around at the checkout of any shop would disabuse one of the misconception that nobody (or very few) uses a physical debit/credit card to pay for stuff.
 
Freelance said:
Otherwise it will just be one more option in a crowded market, vying with other payment methods that already have critical mass.
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Every few years somebody comes along claiming that they are going to disrupt visa & mastercard......I just dont see it.

Lots of the alternative solutions (revolut etc.) are P2P payments that take place, in the main, in high trust transactions. Anybody who has used these services for low trust transaction, over time, has likely learned an expensive lesson on why Visa and MasterCard and the whole merchant acquirer infrastructure exists in the first place.

In low trust transactions - merchants, online - visa & mastercard win everyday of the week.......people just dont realize that the services that MA & V bundle inside a card swipe or phone tap (chargeback services, FX, fraud detection/services etc) are really the oxygen that allow for and support low trust transactions in the economy.....sure they take 0.17% of the transaction....the value they provide for that is immense.....on top of which then you have the acquirers, issuers and processors which is where the bulk of the 2-3% credit card fees people see go.....debit cards its minuscule 0.3-0.5% but you get a tonne of protection for that.

So when I see digital euros or indeed these stablecoin ideas - you've got to explain to me how your going compete with V & M.....in terms of acceptance, speed and consumer protection at scale....when you get down to it.....there just isnt as much 'fat' as people seem to think there is relative to the value created by V or MA's network...on top of which you get issuers, acquirers and processors....its only when you deconstruct all the issues that can occur in a low trust transaction do you realize every one of these pieces exists for a very good reason......of course some people need to re-learn why they exist every now and again by getting scammed a couple of times.
 
If this would stop me having to get cash out of the ATM to pay my barber for a haircut then I'm all for it. Don't use cash or coins for anything else.
 
letitroll said:
In low trust transactions
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I don't think "trust" comes into it. Trust isn't involved with the original ECB currency - notes and coin, except for the possibility of counterfeit and I think even that possibility is eliminated with a digital currency.
It is in that sense like Bitcoin (but without all that peer-to-peer blockchain nonsense).
When digital euro is transferred to your wallet you know you have it because that is what it is. When Dunnes Stores are credited by your use of a Visa card their confidence that this indeed will lead to a credit on their bank account has considerable technical backing behind that assurance and still it isn't absolute.
So is the ECB spared the sort of infrastructure which is needed in the trust architecture. I think it is. Same as with notes and coin - though I guess it has to be careful of internal embezzlement but I don't think it needs to bother with trust in the onward transmission of its digital currency.
 
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What I like about the idea is the separation of payments from lending institutions. They banks are hopefully then no longer too big to fail and can be let do so the next time they blow themselves up. No one should *need* an account with a lending institution, nor need any dependence on one to participate in society.

What I dislike about it is it's a further move towards a cashless society which eventually means we no longer have the ability to self-custody our money in any form, which means money becomes a new vector for oppression. The threat of a bank run where people choose cash instead plays a part in keeping the current system honest.
 
DazedInPontoon said:
What I like about the idea is the separation of payments from lending institutions.
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For sure the concept of a current account would seem redundant. But Fractional Reserve Banking is much more driven by their deposit base. People with surplus digital euro will still seek interest rates on commercial bank deposits. I think the grand plan is that the ECB might indeed pay interest or even charge interest on its digital euro, but only in its role of monetary management not as a competitor with the commercial banks.
DazedInPontoon said:
They banks are hopefully then no longer too big to fail and can be let do so the next time they blow themselves up.
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Not sure about that. It wasn't their current account liabilities that made them too big to fail and as I suggest above the ECB will facilitate an active commercial deposit taking banking sector. This is an essential aspect of our economy - the magic of FRB and the ECB are not going to destroy it.
DazedInPontoon said:
The threat of a bank run where people choose cash instead plays a part in keeping the current system honest.
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This will not change. As I have said the banks' current accounts are a minor player in whether a bank goes bust, it is their deposit base that makes them vulnerable to a run.
 
From centralbank.ie:
You would be able to open a digital euro account at a bank or any other payment service provider
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Doesn't sound like bitcoin (where all you need is an internet connection and a phone/computer) or cash (where all you need is the side pocket of your jeans).

No matter how much the ECB throws about the word "privacy", I really don't see the digital euro rivalling actual cash when it comes to privacy.

Those "payment service providers" will be subject to KYC. In other words, they will be legally mandated to keep an eye on what you do with your money and where you get it.
 
Dominic Ó Galla said:
they will be legally mandated to keep an eye on what you do with your money
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They are not required to monitor what you do with the pound in your pocket and they will have no responsibility for what you do with your digital euro. One of the disappointments as far as I am concerned is this commitment to privacy. I saw it as a perfect way to reduce or at least detect crime.
In any event if the only service you are seeking is a digital wallet, the libertarian lobby will insist that KYC is not required.
 
So in effect, this becomes a wallet stored on your phone which you fund via your bank account. It's no more a digital euro then your bank card is, it's purely a payment mechanism so calling it a digital euro is misleading. A lot of the functionality already exists if you you use your debit card on your phone to make payments.
 
Duke of Marmalade said:
One of the disappointments as far as I am concerned is this commitment to privacy. I saw it as a perfect way to reduce or at least detect crime.
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I think it would be a very useful to reduce or detect crime. I would be highly skeptical that there are no provisions for such in a digital currency. In other words, complete privacy unless there is a suspicion of criminal activity.
 
Duke of Marmalade said:
I don't think "trust" comes into it. Trust isn't involved with the original ECB currency - notes and coin
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Trust is always involved in a transaction....indeed the level of trust required drives the payment method a lot of the time (as well as transaction cost of course). In low margin businesses, for high value amounts only a wire will work.

In person - notes and coins transactions - are high trust transaction cause they happen real life...alot of low value, in-person transaction are this way.....ECB Coin can work here......just like legal tender (watermarks etc.)...bar tender serves you the Guinness you asked for, you can see its Guinness, you give him the cash money. Transaction closed.
 
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