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Comment by sc68cal | Hacker News Reader

The majority of US money is already digital, it exists as "digital balances held by commercial banks at the Federal Reserve"

This paper just is adding a new shiny coat of paint to an already existing mechanism, just with new terms to make people think they're hip.

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There is a massive difference between allowing anyone to have an account at the Federal Reserve vs only commercial banks.

> The Federal Reserve Act does not authorize direct Federal Reserve accounts for individuals, and such accounts would represent a significant expansion of the Federal Reserve’s role in the financial system and the economy. Under an intermediated model, the private sector would offer accounts or digital wallets to facilitate the management of CBDC holdings and pay- ments.

From the Central Bank Digital Currency section under the Intermediated heading.

Not really, because Modern Monetary Theorists on the political left have been advocating for people to be given accounts at the Fed for universal basic income

I've seen lots of calls for the USPS to act as a retail bank but never for the Fed to do so, but maybe the idea would be for the Post Office to be the retail store front for Fed accounts?

If you think one step further, there will be _only_ the digital dollar. No bills anymore. This means total control about your transactions and what you are doing with your money, because it is digitally tracked.

Total control by whom? Most financial transactions occur between numerous financial institutions and wiring intermediaries in between. The finance network is far more decentralized than the web even after consideration for things like SWIFT.

Your financial transactions are already tracked by numerous parties. This is neither secret nor suspect. Without visibility over the transfers, distribution, and behaviors therein how would governments and financial institutions account for ethical violations?

You made a jump that I'm have a hard time following.

Today I'm basically all digital as far as money goes. I can't remember the last time I handled coins or bills. I don't feel like I have no control over my transactions or what I do with my money.

Folks who run small businesses like grocery stores and barber shops deal with cash all the time. Also there is a large class of unbanked folks in the US. Your experience doesn't generalize to everyone.

There are a lot of benefits to cash. I believe that a digital dollar that acts like paper cash is possible, but you need a lot of technologies to make that a reality (e.g. zero-knowledge crypto, and then mechanisms to peg digital asset to fiat). It doesn't quite exist yet today.

Have a look at Canada for a recent precedent: People had their bank accounts frozen for having made donations to support the protests.

https://www.cbc.ca/news/politics/emergencies-act-banks-ottaw...

I didn't know about this so thanks for the link.

Thank your good graces the state doesn’t freeze your account. This has only happened 1000s times before in history, most recently in Canada.

You don’t have money if it’s in the bank. The bank owes you money. Your credit card is a person liability that the bank will let you pay with their money, and they owe you less.

You have no control over your money.

This means you never have been threatened by your bank to block your account and assets. Good luck eating when that happens.

I rarely use cash as it is. No one is controlling my purchases.

Every financial institution that processes your banking activity is also making an allow/deny determination on every transaction. Sorry to break it to you.

Hardly. If a merchant accepts VISA, VISA isn't about to deny my transaction because the determination of suitability has been made before hand (assuming that I have the available credit).

There are certainly cash only markets and the unbanked, the latter a much larger issue than the former. But isn't the existence of crypto (digital currency) supposed to be the grand solution to the former problem? Or does the promises of crypto fall down when actually forced to be used as a currency in a mainstream sense?

Every transaction is subject to OFAC rules.

No, it's not. The majority if US "money" is IOUs from banks. A central bank issued digital dollar would be an IOU from the central bank.Legally it's a very different thing. Practically it will also be very different, at least behind the scenes. It means you could have $10 million in digital dollars and not have to worry about your bank going under. It also gives the federal reserve much more power. If your money is in digital dollars, they can stop the settlement. Right now they'd have to ask your bank to do it for them. Your bank has lawyers and mostly won't do illegal stuff even if asked by the government to do so.

The Federal Reserve writes good papers. I wish all government entities were as thoughtful.

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