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Comment by ericd | Hacker News Reader

Sure, most transactions are digital already. This is about the removal of physical cash as an alternative, and the downsides that presents. Especially interesting is the sudden feasibility of negative interest rates enforced across the board, and the inability to just "keep cash" as an alternative.

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> This is about the removal of physical cash as an alternative

No it's not.

Nowhere in the article does it suggest that, nor is it being contemplated in any serious current policy proposals.

It's about having digital cash transactions handled directly via government ledgers rather than via private intermediaries like MasterCard and Visa and PayPal. Which has all sorts of benefits. After all, money is a public good -- why should digital money be handled exclusively by private corporations making a profit off of it?

If government is in charge of printing the physical money people use directly, it's pretty logically consistent for it also to be in charge of digital ledgers in some form as well. We don't let MasterCard and Visa print up their own hundred dollar bills, after all.

Partly basing it on other discussions around it: https://blogs.imf.org/2019/02/05/cashing-in-how-to-make-nega...

And yes, the article absolutely does mention it:

"CBDC Public Policy Rationale

Advocates of CBDCs suggest that they are necessary, certainly useful, in addressing multiple issues emerging across the global financial system of late. These issues include: ...

Zero-lower bound interest rates (i.e., negative interest rates) – the existence of physical cash results in the severe curtailment of the ability of central banks to lower official interest rates below the zero bound (i.e., implement negative nominal interest rates) given the risk that citizens are likely to withdraw from the financial system by hoarding physical cash if negative nominal interest rates are implemented[12]. "

If that's part of the rationale, what do you think is implied about the continuing existence of physical cash?

The article you're linking to explicitly talks about cash being preserved:

> The proposal is for a central bank to divide the monetary base into two separate local currencies—cash and electronic money (e-money). E-money would be issued only electronically and would pay the policy rate of interest, and cash would have an exchange rate—the conversion rate—against e-money. This conversion rate is key to the proposal.

So considering they're going to all the trouble of defining an exchange rate, what I think is implied about the continuing existence of physical cash is... that it will continue to exist.

The goal here is very explicitly about making negative interest rates workable, not eliminating cash.

You’re right, the article I linked to is more about how to eliminate a pesky attribute of physical cash, not the physical manifestation itself (which I’m frankly less concerned with). My initial comment was mostly meant to be about the removal of physical cash as an alternative to something with a negative nominal yield, which a dual currency does accomplish, it would no longer be an alternative. But separately, I do think the eventual intention is to also get rid of the physical manifestation entirely, with a dual currency as a way to ease toward that.

In case you hadn't seen it, Australia tried to ban the use of cash payments for higher value transactions. It didn't end up passing but it is expected to be revived in future.

https://www.abc.net.au/news/2020-12-07/cash-ban-law-10000-do...

Silly Australians, you just have to make cash socially unacceptable.

Make cashless attractive for key businesses (rent, utilities, groceries, the popular things), make cards attractive for consumers and soon enough those paying in cash are automatically assumed to be drug dealers or worse.

Then reduce the number of available banknotes, reduce the maximum denomination and implement whatever tracking you want.

Just don't do it too soon like Germany or people will cling on to their cash. Not that it helps them much.

The long game is similar. Canada withdrew the 10k, then late 1k and 500 dollar notes.

Now the $100, is worth what a $20 was, 35 years ago.

Eventually it will be worth $5.

With inflation, and time (the long game), all you have to do is wait.

You'll need a duffel bag of hard currency, just to buy groceries.

>We don't let MasterCard and Visa print up their own hundred dollar bills, after all.

Some financial institutions may engage in fractional reserve lending, and if an entity can "securitize" or otherwise creatively determine the value of any assets or liabilities, then effectively they are allowed to create their own money.

In terms of privacy, it IS possible. Look at Monero; but there it would be very very hard to get the government to accept a plan that included that level of privacy. I suppose that one may still have anonymous wallets, which could ensure a certain amount of anonymity absent requirements to the contrary. This whole phenomenon has the eerie likeness of Revelations, buying selling without a number, etc. Let's not intentionally make it come true guys.

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