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| ====== Question: 15. Should a CBDC pay interest? If so, why and how? If not, why not? ====== | ====== Question: 15. Should a CBDC pay interest? If so, why and how? If not, why not? ====== | ||
| - | [[cbdc:private:cbdc_omg:04_doc:20_comments:dsn:start| Return to CBDC Benefits, Risks, and Policy Considerations ]] | + | |< 100% >| |
| + | | [[cbdc:public:cbdc_omg:04_doc:20_comments:dsn:start| Return to Design Considerations ]] | <WRAP> | ||
| + | <html><b> | ||
| + | <a href="mailto:[email protected]?Subject=OMG's CBDC WG Response: | ||
| + | Question: 15. Should a CBDC pay interest? If so, why and how? If not, why not? | ||
| + | ">Provide Feedback</a></b> | ||
| + | </html> | ||
| + | </WRAP> | | ||
| ===== Question ===== | ===== Question ===== | ||
| - | [[cbdc:private:cbdc_omg:04_doc:20_comments:dsn:q15| Return to Top]] | + | [[cbdc:public:cbdc_omg:04_doc:20_comments:dsn:q15:start| Return to Top]] |
| - **Should a CBDC pay interest?** | - **Should a CBDC pay interest?** | ||
| Line 10: | Line 17: | ||
| ===== Answer ===== | ===== Answer ===== | ||
| - | [[cbdc:private:cbdc_omg:04_doc:20_comments:dsn:q15| Return to Top]] | + | [[cbdc:public:cbdc_omg:04_doc:20_comments:dsn:q15:start| Return to Top]] |
| - | The answer depends on the architecture, design and implementation. (See: [[cbdc:private:cbdc_omg:04_doc:15_common:start]]). | + | The answer depends on the architecture, design and implementation. (See: [[cbdc:public:cbdc_omg:04_doc:15_common:start]]). |
| - If it is a replacement for cash: **NO** | - If it is a replacement for cash: **NO** | ||
| - | - If it is a replacement for a bank accounts or equivalent such as [[https://www.omgwiki.org/dido/doku.php?id=dido:public:ra:xapend:xapend.a_glossary:p:payment_card |Payment Cards]] savings, checking, investment, direct pay, credit, debit cards, etc. ): **YES** | + | - If it is a replacement for a bank account or equivalent such as [[https://www.omgwiki.org/dido/doku.php?id=dido:public:ra:xapend:xapend.a_glossary:p:payment_card |Payment Cards]] savings, checking, investment, direct pay, credit, debit cards, etc. ): **YES** |
| ==== Overview ==== | ==== Overview ==== | ||
| - | [[cbdc:private:cbdc_omg:04_doc:20_comments:dsn:q15| Return to Top]] | + | [[cbdc:public:cbdc_omg:04_doc:20_comments:dsn:q15:start| Return to Top]] |
| - | Before an answer can be provided about paying interest on CBDC, it is essential to clearly state the purpose and goals of the CBDC. Based upon the information in the White Paper, it is not clear if the CBDC should be a replacement for Physical Money, a replacement for bank accounts, or a hybrid combination of the two. Currently, there is no interest paid on cash. In fact, that is a motivation for not hoarding cash, but to put it into an account. The interest paid on the account, depends on the kind of account (i.e., checking, savings, certificate of deposit, money market, etc.). | + | Before an answer can be provided about paying interest on CBDC, it is essential to clearly state the purpose and goals of the CBDC. Based on the information in the White Paper, it is not clear if the CBDC should be a replacement for Physical Money, a replacement for bank accounts, or a hybrid combination of the two. Currently, there is no interest paid in cash. In fact, that is a motivation for not hoarding cash, but putting it into an account. The interest paid on the account depends on the kind of account (i.e., checking, savings, certificate of deposit, money market, etc.). |
| Line 26: | Line 33: | ||
| * What about coins? (i.e., penny, nickel, dime, quarter, half-dollar) | * What about coins? (i.e., penny, nickel, dime, quarter, half-dollar) | ||
| * Will it be able to be used everywhere physical money is used? | * Will it be able to be used everywhere physical money is used? | ||
| - | * Can transaction be made using a combination of CBDC and Physical Money? | + | * Can transactions be made using a combination of CBDC and Physical Money? |
| * Can CBDC and Physical Money be interchanged? Where? Fees? | * Can CBDC and Physical Money be interchanged? Where? Fees? | ||
| - | 2. Is it supposed to be the equivalent of a financial account (i.e, savings, checking, investment, direct pay, credit, debit cards, etc. ) ? If so: | + | 2. Is it supposed to be the equivalent of a financial account (i.e, savings, checking, investment, direct pay, credit, debit cards, etc. )? If so: |
| * How many accounts can an individual have? | * How many accounts can an individual have? | ||
| * Is there a cost for maintaining the accounts? | * Is there a cost for maintaining the accounts? | ||
| Line 44: | Line 51: | ||
| ==== Examples ==== | ==== Examples ==== | ||
| - | [[cbdc:private:cbdc_omg:04_doc:20_comments:dsn:q15| Return to Top]] | + | [[cbdc:public:cbdc_omg:04_doc:20_comments:dsn:q15:start| Return to Top]] |
| - | There are three categories of requirements alluded to in the [[https://www.omgwiki.org/CBDC/doku.php?id=cbdc:private:cbdc_omg:15_summary:start&do=edit | White Paper]] as identified by the identified by the [[https://www.omg.org/ | Object Management Group ]] [[https://www.omgwiki.org/CBDC/doku.php?id=cbdc:private:cbdc_omg:15_summary:start | White Paper Analysis]]: | + | There are three categories of requirements alluded to in the [[https://www.federalreserve.gov/publications/files/money-and-payments-20220120.pdf | White Paper]] as identified by the [[https://www.omg.org/ | Object Management Group's ]] CBDC WG [[cbdc:public:cbdc_omg:04_doc:12_summary:start | White Paper Analysis]]: |
| There are three Currency Models that are applicable to the CBDC. | There are three Currency Models that are applicable to the CBDC. | ||
| - | * **[[cbdc:private:cbdc_omg:04_doc:15_common:08_currency_models:10_cash:start]]** - is a model representing the CBDC using cash (i.e., coins, \$1, \$2, \$5, \$10, \$20, \$50 and \$100 bills)) as the basis of the CBDC | + | * **[[cbdc:public:cbdc_omg:04_doc:15_common:08_currency_models:10_cash:start]]** - is a model representing the CBDC using cash (i.e., coins, \$1, \$2, \$5, \$10, \$20, \$50 and \$100 bills)) as the basis of the CBDC |
| - | * **[[cbdc:private:cbdc_omg:04_doc:15_common:08_currency_models:15_accounts:start]]** - is a model that represents the CBDC in using digital accounts (i.e, Savings, Checking, Investment, Direct Pay, Credit Cards, Debit Cards, etc.) | + | * **[[cbdc:public:cbdc_omg:04_doc:15_common:08_currency_models:15_accounts:start]]** - is a model that represents the CBDC in using digital accounts (i.e, Savings, Checking, Investment, Direct Pay, Credit Cards, Debit Cards, etc.) |
| - | * **[[cbdc:private:cbdc_omg:04_doc:15_common:30_stablecoins:start]]** - is a currency model tying a cryptocurrency to a real world asset such as a fiat currency, gold, indexed funds. etc. | + | * **[[cbdc:public:cbdc_omg:04_doc:15_common:30_stablecoins:start]]** - is a currency model tying a cryptocurrency to a real world asset such as a fiat currency, gold, indexed funds. etc. |
| Table {{ref>AccountTypeReqiurements}} provides a list of requirements associated with each of the CBDC model taxonomy. | Table {{ref>AccountTypeReqiurements}} provides a list of requirements associated with each of the CBDC model taxonomy. | ||
| <table AccountTypeReqiurements> | <table AccountTypeReqiurements> | ||
| - | <caption>Example of mapping a subset of requirements identified during the White Paper Analysis conducted by the OMG</caption> | + | <caption>Example of mapping a subset of requirements identified during the White Paper Analysis conducted by the OMG's CBDC WG.</caption> |
| ^ Topic ^ Requirements ^ | ^ Topic ^ Requirements ^ | ||
| - | ^ [[cbdc:private:cbdc_omg:04_doc:15_common:08_currency_models:10_cash:start| Digital Cash Model]] | <WRAP> | + | ^ [[cbdc:public:cbdc_omg:04_doc:15_common:08_currency_models:10_cash:start| Digital Cash Model]] | <WRAP> |
| - | * B0003, B0004, B0007, B0009, B0013, B0018, B0020, B0022-1, B0022-2, B0022-3, B0024, B0028, B0029, B0034, B0036, B0040, B0042 | + | : B: B0003, B0004, B0007, B0009, B0013, B0018, B0020, B0022-1, B0022-2, B0022-3, B0024, B0028, B0029, B0034, B0036, B0040, B0042 |
| - | * P0004, P0027, P0029 | + | : P: P0004, P0027, P0029 |
| - | * R0013 | + | : R: R0013 |
| - | * D0001, D0006, D0007, D0009 | + | : D: D0001, D0006, D0007, D0009 |
| </WRAP>| | </WRAP>| | ||
| - | ^ [[cbdc:private:cbdc_omg:04_doc:15_common:08_currency_models:15_accounts:start| Digital Account Model]] | <WRAP> | + | ^ [[cbdc:public:cbdc_omg:04_doc:15_common:08_currency_models:15_accounts:start| Digital Account Model]] | <WRAP> |
| - | * B0005, B0010, B0022-4, B0038, B0047, B0048, B0049, B0051, B0054 | + | : B: B0005, B0010, B0022-4, B0038, B0047, B0048, B0049, B0051, B0054 |
| - | * P0002, P0012, P0013, P0017, P0018, P0019, P0020, P0021, P0023, P0024, P0025, P0017, P0028, P0030 | + | : P: P0002, P0012, P0013, P0017, P0018, P0019, P0020, P0021, P0023, P0024, P0025, P0017, P0028, P0030 |
| - | * R0002, R0009, R0012, R0015, R0020, R0023 | + | : R: R0002, R0009, R0012, R0015, R0020, R0023 |
| - | * D0001, D0002, D0003, D0005, D0008, D0010, D0012, D0013, | + | : D: D0001, D0002, D0003, D0005, D0008, D0010, D0012, D0013, |
| </WRAP>| | </WRAP>| | ||
| - | ^ [[cbdc:private:cbdc_omg:04_doc:15_common:30_stablecoins:start| Stablecoin / Research]] | <WRAP> | + | ^ [[cbdc:public:cbdc_omg:04_doc:15_common:30_stablecoins:start| Stablecoin / Research]] | <WRAP> |
| - | * B0016, B0017, B0021 | + | : B: B0016, B0017, B0021 |
| - | * P0008, P0015, P0016 | + | : P: P0008, P0015, P0016 |
| - | * R0010, R0017, R0019, R0020, R0021, R0022 | + | : R: R0010, R0017, R0019, R0020, R0021, R0022 |
| </WRAP>| | </WRAP>| | ||
| </table> | </table> | ||
| Line 80: | Line 87: | ||
| ==== Discussion of Examples ==== | ==== Discussion of Examples ==== | ||
| - | [[cbdc:private:cbdc_omg:04_doc:20_comments:dsn:q15| Return to Top]] | + | [[cbdc:public:cbdc_omg:04_doc:20_comments:dsn:q15:start| Return to Top]] |
| The following discussion of the three models identified in the requirements. Each section is independent of the other sections and can be read //as-is//. | The following discussion of the three models identified in the requirements. Each section is independent of the other sections and can be read //as-is//. | ||
| === Digital Cash Model === | === Digital Cash Model === | ||
| - | [[cbdc:private:cbdc_omg:04_doc:20_comments:dsn:q15| Return to Top]] | + | [[cbdc:public:cbdc_omg:04_doc:20_comments:dsn:q15:start| Return to Top]] |
| - | Many of the OMG-identified "desirements" found in the [[https://www.federalreserve.gov/publications/files/money-and-payments-20220120.pdf | Money, and Payments: The U.S. Dollar in the Age of Digital Transformation]] **White Paper** during the [[https://www.omgwiki.org/CBDC/doku.php?id=cbdc:private:cbdc_omg:15_summary:start | White Paper Analysis]] appear to be appropriate of a CBDC "Cash Model". The "Cash Model" uses Digital Money in an analogous model as Cash for CBDC. For example, the requirements **''B0004''** which is a requirement to //"Protect consumer privacy"// is more closely related to a "cash mode" rather than a bank account model. There are no bank accounts required in order to complete a transaction, just "cash" in exchange for goods and services. This is in contrast to checkbooks, debit or credit card transactions, which are associated with an account offered by intermediary commercial banks and directly tied to an Identity. | + | Many of the OMG CBDC WG-identified "desirements" found in the [[https://www.federalreserve.gov/publications/files/money-and-payments-20220120.pdf | Money, and Payments: The U.S. Dollar in the Age of Digital Transformation]] **White Paper** during the [[cbdc:public:cbdc_omg:15_summary:start | White Paper Analysis]] appear to be appropriate of a CBDC "Cash Model". The "Cash Model" uses Digital Money in an analogous model as Cash for CBDC. For example, the requirements **''B0004''** which is a requirement to //"Protect consumer privacy"// is more closely related to a "cash mode" rather than a bank account model. There are no bank accounts required in order to complete a transaction, just "cash" in exchange for goods and services. This is in contrast to checkbooks, debit, or credit card transactions, which are associated with an account offered by intermediary commercial banks and directly tied to an Identity. |
| <table cash> | <table cash> | ||
| Line 95: | Line 102: | ||
| ^ B0004 ^ Protect consumer privacy | There are no identities required for cash transactions. | | ^ B0004 ^ Protect consumer privacy | There are no identities required for cash transactions. | | ||
| ^ B0007 ^ Provide households and businesses a: <WRAP> | ^ B0007 ^ Provide households and businesses a: <WRAP> | ||
| - | - convenient | + | : 1. convenient |
| - | - an electronic form of central bank money with | + | : 2. an electronic form of central bank money with |
| - | - safety | + | : a. safety |
| - | - [[https://www.omgwiki.org/dido/doku.php?id=dido:public:ra:xapend:xapend.a_glossary:l:liquidity | liquidity]] | + | : b. [[https://www.omgwiki.org/dido/doku.php?id=dido:public:ra:xapend:xapend.a_glossary:l:liquidity | liquidity]] |
| </WRAP>| <WRAP> | </WRAP>| <WRAP> | ||
| - | * Cash probably represents the epitome of liquidity, that is, unless the size of the transaction gets too big, then US Federal law requires a person to report cash transactions of more than \$10,000 by filing IRS Form 8300 PDF, Report of Cash Payments Over \$10,000 received in a Trade or Business. (( | + | : 1. Cash probably represents the epitome of liquidity, that is, unless the size of the transaction gets too big, then US Federal law requires a person to report cash transactions of more than \$10,000 by filing IRS Form 8300 PDF, Report of Cash Payments Over \$10,000 received in a Trade or Business. (( |
| Internal Revenue Service, | Internal Revenue Service, | ||
| __Cash payment report helps government combat money laundering__, | __Cash payment report helps government combat money laundering__, | ||
| Line 106: | Line 113: | ||
| [[https://www.irs.gov/newsroom/cash-payment-report-helps-government-combat-money-laundering]] | [[https://www.irs.gov/newsroom/cash-payment-report-helps-government-combat-money-laundering]] | ||
| )) | )) | ||
| - | * With cash, your spending is straightforward and there is less risk of identity theft. Ultimately, it's up to each individual to make the best decisions based on their financial health, what they are purchasing, and the risks they are willing to incur(( | + | : 2. With cash, your spending is straightforward and there is less risk of identity theft. Ultimately, it's up to each individual to make the best decisions based on their financial health, what they are purchasing, and the risks they are willing to incur(( |
| Andrew Beattie, | Andrew Beattie, | ||
| Investopedia, | Investopedia, | ||
| Line 119: | Line 126: | ||
| ^ B0018 ^ Allow the general public to make digital payments | Digital cash should be immediately transferrable to traditional cash, and therefore, it should be at least as usable for digital payments as actual cash, but can also be used online just like Direct Pay, Credit, or Debit Cards. | | ^ B0018 ^ Allow the general public to make digital payments | Digital cash should be immediately transferrable to traditional cash, and therefore, it should be at least as usable for digital payments as actual cash, but can also be used online just like Direct Pay, Credit, or Debit Cards. | | ||
| ^ B0019 ^ Provide the safest digital asset available to the general public, with no: <WRAP> | ^ B0019 ^ Provide the safest digital asset available to the general public, with no: <WRAP> | ||
| - | - associated credit | + | : 1. associated credit |
| - | - liquidity risk | + | : 2. liquidity risk |
| </WRAP>| With cash, there is no need for credit and by definition it is liquid. See [[https://www.omgwiki.org/dido/doku.php?id=dido:public:ra:xapend:xapend.a_glossary:l:liquidity_risk | Liquidity Risk]] | | </WRAP>| With cash, there is no need for credit and by definition it is liquid. See [[https://www.omgwiki.org/dido/doku.php?id=dido:public:ra:xapend:xapend.a_glossary:l:liquidity_risk | Liquidity Risk]] | | ||
| ^ B0020 ^ Maintain public confidence by not requiring mechanisms, such as deposit insurance | The only need for [[https://www.omgwiki.org/dido/doku.php?id=dido:public:ra:xapend:xapend.a_glossary:d:deposit_insurance]] is when there is not enough cash in hand to pay for liabilities. By definition, a cash-based CBDC would have enough cash. | | ^ B0020 ^ Maintain public confidence by not requiring mechanisms, such as deposit insurance | The only need for [[https://www.omgwiki.org/dido/doku.php?id=dido:public:ra:xapend:xapend.a_glossary:d:deposit_insurance]] is when there is not enough cash in hand to pay for liabilities. By definition, a cash-based CBDC would have enough cash. | | ||
| ^ B0022 ^ Provide a CBDC that is:<WRAP> | ^ B0022 ^ Provide a CBDC that is:<WRAP> | ||
| - | - [[cbdc:private:cbdc_omg:8_append:20_glossary:privacy-protected| Privacy-Protected ]] | + | : 1. [[cbdc:public:cbdc_omg:8_append:20_glossary:privacy-protected| Privacy-Protected ]] |
| - | - NOT [[cbdc:private:cbdc_omg:8_append:20_glossary:intermediated| Intermediated]] | + | : 2. NOT [[cbdc:public:cbdc_omg:8_append:20_glossary:intermediated| Intermediated]] |
| - | - [[cbdc:private:cbdc_omg:8_append:20_glossary:transferable| Widely Transferable]] | + | : 3. [[cbdc:public:cbdc_omg:8_append:20_glossary:transferable| Widely Transferable]] |
| - | - NOT [[cbdc:private:cbdc_omg:8_append:20_glossary:identity-verified| Identity-Verified]] | + | : 4. NOT [[cbdc:public:cbdc_omg:8_append:20_glossary:identity-verified| Identity-Verified]] |
| </WRAP> | By definition, cash is considered private and is widely transferable unless the quantity of cash makes it too onerous. | | </WRAP> | By definition, cash is considered private and is widely transferable unless the quantity of cash makes it too onerous. | | ||
| ^ B0024 ^ Provide transactions finalized and completed in real-time | Since there is no need to do a background check on the participants in a cash transaction, the transaction is real-time. | | ^ B0024 ^ Provide transactions finalized and completed in real-time | Since there is no need to do a background check on the participants in a cash transaction, the transaction is real-time. | | ||
| ^ B0028 ^ Offer the general public broad access to digital money: <WRAP> | ^ B0028 ^ Offer the general public broad access to digital money: <WRAP> | ||
| - | - free from credit risk | + | : 1. free from credit risk |
| - | - liquidity risk | + | : 2. liquidity risk |
| </WRAP>| Cash is by definition does not require credit and inherently no [[https://www.omgwiki.org/dido/doku.php?id=dido:public:ra:xapend:xapend.a_glossary:l:liquidity_risk | Liquidity Risk]]. | | </WRAP>| Cash is by definition does not require credit and inherently no [[https://www.omgwiki.org/dido/doku.php?id=dido:public:ra:xapend:xapend.a_glossary:l:liquidity_risk | Liquidity Risk]]. | | ||
| ^ B0029 ^ Support basic purchases of: <WRAP> | ^ B0029 ^ Support basic purchases of: <WRAP> | ||
| - | - goods | + | : 1. goods |
| - | - services | + | : 2. services |
| - | - pay bills | + | : 3. pay bills |
| - | - pay taxes | + | : 4. pay taxes |
| </WRAP>| <WRAP> | </WRAP>| <WRAP> | ||
| There is no federal statute mandating that a private business, a person, or an organization must accept currency or coins as payment for goods or services. Private businesses are free to develop their own policies on whether to accept cash unless there is a state law that says otherwise. [[https://www.federalreserve.gov/faqs/currency_12772.htm]], Therefore, the same can be applied to Digital Cash. | There is no federal statute mandating that a private business, a person, or an organization must accept currency or coins as payment for goods or services. Private businesses are free to develop their own policies on whether to accept cash unless there is a state law that says otherwise. [[https://www.federalreserve.gov/faqs/currency_12772.htm]], Therefore, the same can be applied to Digital Cash. | ||
| - | Although it is currently possible to pay Federal taxes in cash, it is more difficult than paying online with Direct Pay, Credit or Debit Cards. | + | Although it is currently possible to pay Federal taxes in cash, it is more difficult than paying online with Direct Pay, Credit, or Debit Cards. |
| </WRAP> | | </WRAP> | | ||
| ^ B0034 ^ Generate new capabilities to meet the speed and efficiency requirements of the digital economy | Although cash is quick and efficient during face-to-face transactions, it is difficult ver long distances or when the payments become large. | | ^ B0034 ^ Generate new capabilities to meet the speed and efficiency requirements of the digital economy | Although cash is quick and efficient during face-to-face transactions, it is difficult ver long distances or when the payments become large. | | ||
| Line 156: | Line 163: | ||
| ^ D0007 ^ **Design** should allow the Federal Reserve to increase the level of reserves on average, in order to provide an adequate buffer against unanticipated increases in CBDC | Under the CBDC cash model, the Federal Reserve would treat CBDC reserves similarly to cash reserves | | ^ D0007 ^ **Design** should allow the Federal Reserve to increase the level of reserves on average, in order to provide an adequate buffer against unanticipated increases in CBDC | Under the CBDC cash model, the Federal Reserve would treat CBDC reserves similarly to cash reserves | | ||
| ^ D0009 ^ **Design** should allow for significant foreign demand for CBDC, furthering complicate monetary policy implementation | See: **''B0009''** | | ^ D0009 ^ **Design** should allow for significant foreign demand for CBDC, furthering complicate monetary policy implementation | See: **''B0009''** | | ||
| - | | **''B''** = [[cbdc:private:cbdc_omg:04_doc:12_summary:start#benefits| Benefit Considerations ]] ||| | + | | **''B''** = [[cbdc:public:cbdc_omg:04_doc:12_summary:start#benefits| Benefit Considerations ]] ||| |
| - | | **''P''** = [[cbdc:private:cbdc_omg:04_doc:12_summary:start#policy_considerations| Policy Considerations]] ||| | + | | **''P''** = [[cbdc:public:cbdc_omg:04_doc:12_summary:start#policy_considerations| Policy Considerations]] ||| |
| - | | **''R''** = [[cbdc:private:cbdc_omg:04_doc:12_summary:start#risks| Risk Considerations ]] ||| | + | | **''R''** = [[cbdc:public:cbdc_omg:04_doc:12_summary:start#risks| Risk Considerations ]] ||| |
| - | | **''D''** = [[cbdc:private:cbdc_omg:04_doc:12_summary:start#design| Design Considerations]] ||| | + | | **''D''** = [[cbdc:public:cbdc_omg:04_doc:12_summary:start#design| Design Considerations]] ||| |
| </table> | </table> | ||
| === Digital Account Model === | === Digital Account Model === | ||
| - | [[cbdc:private:cbdc_omg:04_doc:20_comments:dsn:q15| Return to Top]] | + | [[cbdc:public:cbdc_omg:04_doc:20_comments:dsn:q15:start| Return to Top]] |
| - | Many of the OMG identified requirements found in the [[https://www.federalreserve.gov/publications/files/money-and-payments-20220120.pdf | Money, and Payments: The U.S. Dollar in the Age of Digital Transformation]] **White Paper** during the [[https://www.omgwiki.org/CBDC/doku.php?id=cbdc:private:cbdc_omg:15_summary:start | White Paper Analysis]] appear to be appropriate of a CBDC **"Account Model"**. The **"Account Model"** uses Digital Money in an analogous model as Accounts for CBDC. For example, the requirement **''B0005''** is a requirement to //"Protect against criminal activity| In this context, criminal activity is either Money Laundering or Fraud. Fraud is an intentionally deceptive action designed to provide the perpetrator with an unlawful gain or to deny a right to a victim. Types of fraud include tax fraud, credit card fraud, wire fraud, securities fraud, and bankruptcy fraud. Fraudulent activity can be carried out by one individual, multiple individuals, or a business firm as a whole"// is easily associated with **Accounts**. | + | Many of the OMG CBDC WG identified requirements found in the [[https://www.federalreserve.gov/publications/files/money-and-payments-20220120.pdf | Money, and Payments: The U.S. Dollar in the Age of Digital Transformation]] **White Paper** during the [[cbdc:public:cbdc_omg:15_summary:start | White Paper Analysis]] appear to be appropriate of a CBDC **"Account Model"**. The **"Account Model"** uses Digital Money in an analogous model as Accounts for CBDC. For example, the requirement **''B0005''** is a requirement to //"Protect against criminal activity| In this context, criminal activity is either Money Laundering or Fraud. Fraud is an intentionally deceptive action designed to provide the perpetrator with an unlawful gain or to deny a right to a victim. Types of fraud include tax fraud, credit card fraud, wire fraud, securities fraud, and bankruptcy fraud. Fraudulent activity can be carried out by one individual, multiple individuals, or a business firm as a whole"// is easily associated with **Accounts**. |
| <table cash> | <table cash> | ||
| Line 174: | Line 181: | ||
| ^ B0010 ^ Expand consumer access to the financial system | A financial system is the entire set of non-cash-based institutions (i.e., banks, thrifts, insurance companies, stock exchanges, etc.) permitting and facilitating the exchange of funds. The expansion would entail adding people to these institutions | | ^ B0010 ^ Expand consumer access to the financial system | A financial system is the entire set of non-cash-based institutions (i.e., banks, thrifts, insurance companies, stock exchanges, etc.) permitting and facilitating the exchange of funds. The expansion would entail adding people to these institutions | | ||
| ^ B0022 ^ Provide a CBDC that is:<WRAP> | ^ B0022 ^ Provide a CBDC that is:<WRAP> | ||
| - | - NOT [[cbdc:private:cbdc_omg:8_append:20_glossary:privacy-protected| Privacy-Protected ]] | + | : 1. NOT [[cbdc:public:cbdc_omg:8_append:20_glossary:privacy-protected| Privacy-Protected ]] |
| - | - [[cbdc:private:cbdc_omg:8_append:20_glossary:intermediated| Intermediated]] | + | : 2. [[cbdc:public:cbdc_omg:8_append:20_glossary:intermediated| Intermediated]] |
| - | - NOT [[cbdc:private:cbdc_omg:8_append:20_glossary:transferable| Widely Transferable]] | + | : 3. NOT [[cbdc:public:cbdc_omg:8_append:20_glossary:transferable| Widely Transferable]] |
| - | - [[cbdc:private:cbdc_omg:8_append:20_glossary:identity-verified| Identity-Verified]] | + | : 4. [[cbdc:public:cbdc_omg:8_append:20_glossary:identity-verified| Identity-Verified]] |
| </WRAP> | Intermediated generally implies accounts or digital wallets. Identity-Verified generally implies validating and verifying a person's identity to gain access to their accounts | | </WRAP> | Intermediated generally implies accounts or digital wallets. Identity-Verified generally implies validating and verifying a person's identity to gain access to their accounts | | ||
| ^ B0038 ^ Allow private-sector innovators to focus on: <WRAP> | ^ B0038 ^ Allow private-sector innovators to focus on: <WRAP> | ||
| - | - new access services | + | : 1. new access services |
| - | - distribution methods | + | : 2. distribution methods |
| - | - related service offerings | + | : 3. related service offerings |
| </WRAP>| These innovations would predominately be account-based. | | </WRAP>| These innovations would predominately be account-based. | | ||
| ^ B0047 ^ Lower transaction costs | Normally, there are no transaction costs for using cash | | ^ B0047 ^ Lower transaction costs | Normally, there are no transaction costs for using cash | | ||
| Line 189: | Line 196: | ||
| ^ B0051 ^ Generate data about users’ financial transactions similar to the current Commercial Bank(( | ^ B0051 ^ Generate data about users’ financial transactions similar to the current Commercial Bank(( | ||
| Commercial banks include banks licensed either by federal or state banking agencies, credit unions, and thrifts from the **White Paper**. | Commercial banks include banks licensed either by federal or state banking agencies, credit unions, and thrifts from the **White Paper**. | ||
| - | )) and [[cbdc:private:cbdc_omg:8_append:20_glossary:nonbank_money]] | This kind of data is collected on the activity in accounts. | | + | )) and [[cbdc:public:cbdc_omg:8_append:20_glossary:nonbank_money]] | This kind of data is collected on the activity in accounts. | |
| ^ B0054 ^ Attract risk-averse users to CBDC | Risk Adverse investments usually pay little to no incentive to investors, but their value remains constant. Cash represents that kind of investment | | ^ B0054 ^ Attract risk-averse users to CBDC | Risk Adverse investments usually pay little to no incentive to investors, but their value remains constant. Cash represents that kind of investment | | ||
| - | ^ P0002 ^ Provide Yield benefits more effectively than alternative methods | Cash generally offers no yield, therefore, this would require accounts | | + | ^ P0002 ^ Provide Yield benefits more effectively than alternative methods | Cash generally offers no yield; therefore, this would require accounts | |
| ^ P0005 ^ Protect against criminal activity | See: **''B0005''** | | ^ P0005 ^ Protect against criminal activity | See: **''B0005''** | | ||
| ^ P0012 ^ The firms that operate interbank payment services are subject to federal supervision | These services typically use accounts to move payments unless it is referring to armored guards and vehicles | | ^ P0012 ^ The firms that operate interbank payment services are subject to federal supervision | These services typically use accounts to move payments unless it is referring to armored guards and vehicles | | ||
| ^ P0013 ^ Systemically important payment firms are subject to <WRAP> | ^ P0013 ^ Systemically important payment firms are subject to <WRAP> | ||
| - | - heightened supervision | + | : 1. heightened supervision |
| - | - regulation | + | : 2. regulation |
| </WRAP>| Refers to the accounting practices used by the payment firms | | </WRAP>| Refers to the accounting practices used by the payment firms | | ||
| ^ P0017 ^ The PWG report recommends CBDC complement existing authorities regarding <WRAP> | ^ P0017 ^ The PWG report recommends CBDC complement existing authorities regarding <WRAP> | ||
| - | - market integrity | + | : 1. market integrity |
| - | - investor protection | + | : 2. investor protection |
| - | - illicit finance | + | : 3. illicit finance |
| </WRAP>| Refers to the accounting practices for CBDC accounts | | </WRAP>| Refers to the accounting practices for CBDC accounts | | ||
| ^ P0018 ^ The Federal Reserve Act does not authorize direct Federal Reserve accounts for individuals | Refers to accounts | | ^ P0018 ^ The Federal Reserve Act does not authorize direct Federal Reserve accounts for individuals | Refers to accounts | | ||
| Line 212: | Line 219: | ||
| ^ P0027 ^ CBDC a risk-free asset | See: **''B0054''** | | ^ P0027 ^ CBDC a risk-free asset | See: **''B0054''** | | ||
| ^ P0028 ^ Require significant international coordination to address issues such as:<WRAP> | ^ P0028 ^ Require significant international coordination to address issues such as:<WRAP> | ||
| - | - common standards | + | : 1. common standards |
| - | - infrastructure, | + | : 2. infrastructure, |
| - | - the types of intermediaries able to access any new infrastructure, | + | : 3. the types of intermediaries able to access any new infrastructure, |
| - | - legal frameworks | + | : 4. legal frameworks |
| - | - preventing illicit transactions | + | : 5. preventing illicit transactions |
| - | - the cost and timing of implementation | + | : 6. the cost and timing of implementation |
| </WRAP>| | | </WRAP>| | | ||
| ^ P0030 ^ The Federal Reserve will only take further steps toward developing a CBDC if: <WRAP> | ^ P0030 ^ The Federal Reserve will only take further steps toward developing a CBDC if: <WRAP> | ||
| - | - Research points to benefits for households, businesses, and the economy overall that exceed the downside risks | + | : 1. Research points to benefits for households, businesses, and the economy overall that exceed the downside risks |
| - | - Indicates that CBDC is superior to alternative methods | + | : 2. Indicates that CBDC is superior to alternative methods |
| </WRAP>| See: **''B0054''** | | </WRAP>| See: **''B0054''** | | ||
| ^ R0002 ^ **Risk** to the cost and availability of credit | See: **''B0054''** | | ^ R0002 ^ **Risk** to the cost and availability of credit | See: **''B0054''** | | ||
| ^ R0009 ^ Increased **Risk** of "runs" or other instabilities to the financial system | | | ^ R0009 ^ Increased **Risk** of "runs" or other instabilities to the financial system | | | ||
| ^ R0012 ^ **Risk** of increased concern related to the potential for: <WRAP> | ^ R0012 ^ **Risk** of increased concern related to the potential for: <WRAP> | ||
| - | - destabilizing "runs" | + | : 1. destabilizing "runs" |
| - | - disruptions in the payment system | + | : 2. disruptions in the payment system |
| - | - concentration of economic power | + | : 3. concentration of economic power |
| </WRAP>| See: **''B0054''** | | </WRAP>| See: **''B0054''** | | ||
| ^ R0013 ^ CBDC offers no associated credit or liquidity **Risk** | See: **''B0054''** | | ^ R0013 ^ CBDC offers no associated credit or liquidity **Risk** | See: **''B0054''** | | ||
| Line 244: | Line 251: | ||
| ^ D0012 ^ **Design** should address privacy concerns by leveraging existing tools already in use by intermediaries | These restrictions imply accounts | | ^ D0012 ^ **Design** should address privacy concerns by leveraging existing tools already in use by intermediaries | These restrictions imply accounts | | ||
| ^ D0013 ^ **Design** should facilitate compliance with a robust set of rules already intended to combat <WRAP> | ^ D0013 ^ **Design** should facilitate compliance with a robust set of rules already intended to combat <WRAP> | ||
| - | - money laundering | + | : 1. money laundering |
| - | - the financing of terrorism | + | : 2. the financing of terrorism |
| - | - customer due diligence | + | : 3. customer due diligence |
| - | - record-keeping | + | : 4. record-keeping |
| - | - reporting requirements | + | : 5. reporting requirements |
| </WRAP>| These restrictions imply accounts | | </WRAP>| These restrictions imply accounts | | ||
| - | | **''B''** = [[cbdc:private:cbdc_omg:04_doc:12_summary:start#benefits| Benefit Considerations ]] ||| | + | | **''B''** = [[cbdc:public:cbdc_omg:04_doc:12_summary:start#benefits| Benefit Considerations ]] ||| |
| - | | **''P''** = [[cbdc:private:cbdc_omg:04_doc:12_summary:start#policy_considerations| Policy Considerations]] ||| | + | | **''P''** = [[cbdc:public:cbdc_omg:04_doc:12_summary:start#policy_considerations| Policy Considerations]] ||| |
| - | | **''R''** = [[cbdc:private:cbdc_omg:04_doc:12_summary:start#risks| Risk Considerations ]] ||| | + | | **''R''** = [[cbdc:public:cbdc_omg:04_doc:12_summary:start#risks| Risk Considerations ]] ||| |
| - | | **''D''** = [[cbdc:private:cbdc_omg:04_doc:12_summary:start#design| Design Considerations]] ||| | + | | **''D''** = [[cbdc:public:cbdc_omg:04_doc:12_summary:start#design| Design Considerations]] ||| |
| </table> | </table> | ||
| === Stablecoin / Research === | === Stablecoin / Research === | ||
| - | [[cbdc:private:cbdc_omg:04_doc:20_comments:dsn:q15| Return to Top]] | + | [[cbdc:public:cbdc_omg:04_doc:20_comments:dsn:q15:start| Return to Top]] |
| - | The [[https://www.federalreserve.gov/publications/files/money-and-payments-20220120.pdf | White Paper]] and summarized by the [[https://www.omg.org/ | Object Management Group's ]] [[cbdc:private:cbdc_omg:04_doc:12_summary:start| White Paper Analysis]] provide some insight as to "what's next" with CBDC. The **White Paper** is not intended to advance a specific policy outcome and takes no position on the ultimate desirability of a U.S. CBDC [**''P0008''**]. Furthermore, the Federal Reserve will only take further steps toward developing a CBDC if [**''P0030''**]: | + | The [[https://www.federalreserve.gov/publications/files/money-and-payments-20220120.pdf | White Paper]] and summarized by the [[https://www.omg.org/ | Object Management Group's ]] |
| + | CBDC WG [[cbdc:public:cbdc_omg:04_doc:12_summary:start| White Paper Analysis]] provide some insight as to "what's next" with CBDC. The **White Paper** is not intended to advance a specific policy outcome and takes no position on the ultimate desirability of a U.S. CBDC [**''P0008''**]. Furthermore, the Federal Reserve will only take further steps toward developing a CBDC if [**''P0030''**]: | ||
| - Research points to benefits for households, businesses, and the economy overall that exceed the downside risks | - Research points to benefits for households, businesses, and the economy overall that exceed the downside risks | ||
| - Indicates that CBDC is superior to alternative methods | - Indicates that CBDC is superior to alternative methods | ||
| - | In addition, the Federal Reserve does not intend to proceed with the issuance of a CBDC without clear support from [**''P0011''**]: | + | In addition, the Federal Reserve does not intend to proceed with the issuance of a CBDC without explicit support from [**''P0011''**]: |
| - the Executive Branch | - the Executive Branch | ||
| - Legislative Branch | - Legislative Branch | ||
| Line 271: | Line 279: | ||
| The following topics are covered in the **White Paper**, which would require further research in order to garner broad public and cross-governmental support [**''P0031''**]: | The following topics are covered in the **White Paper**, which would require further research in order to garner broad public and cross-governmental support [**''P0031''**]: | ||
| - | : **Note:** Also see: [[cbdc:private:cbdc_omg:04_doc:15_common:30_stablecoins:start]] in context of Currency Models. | + | : **Note:** Also see: [[cbdc:public:cbdc_omg:04_doc:15_common:30_stablecoins:start]] in context of Currency Models. |
| Line 278: | Line 286: | ||
| ^ Requirement ^ Statement ^ Comment ^ | ^ Requirement ^ Statement ^ Comment ^ | ||
| ^ B0016 ^ Provide Stablecoins that are: <WRAP> | ^ B0016 ^ Provide Stablecoins that are: <WRAP> | ||
| - | - well-designed | + | : 1. well-designed |
| - | - appropriately regulated | + | : 2. appropriately regulated |
| </WRAP>| Stablecoin is a specific solution | | </WRAP>| Stablecoin is a specific solution | | ||
| ^ B0017 ^ Provide Stablecoins that are: <WRAP> | ^ B0017 ^ Provide Stablecoins that are: <WRAP> | ||
| - | - faster | + | : 1. faster |
| - | - more efficient | + | : 2. more efficient |
| - | - more inclusive payment | + | : 3. more inclusive payment |
| </WRAP>| Stablecoin is a specific solution | | </WRAP>| Stablecoin is a specific solution | | ||
| ^ B0021 ^ Maintain value by not using backing by an underlying asset | **Conflict** with **''B0017''** | | ^ B0021 ^ Maintain value by not using backing by an underlying asset | **Conflict** with **''B0017''** | | ||
| Line 295: | Line 303: | ||
| ^ R0021 ^ **Risk** of reducing credit availability or raising credit costs for businesses and governments | Requires Research | | ^ R0021 ^ **Risk** of reducing credit availability or raising credit costs for businesses and governments | Requires Research | | ||
| ^ R0022 ^ **Risk** of Stablecoins and other types of **''nonbank''** money shifting deposits away from banks even without a CBDC | Stablecoin is a specific solution | | ^ R0022 ^ **Risk** of Stablecoins and other types of **''nonbank''** money shifting deposits away from banks even without a CBDC | Stablecoin is a specific solution | | ||
| - | | **''B''** = [[cbdc:private:cbdc_omg:04_doc:12_summary:start#benefits| Benefit Considerations ]] ||| | + | | **''B''** = [[cbdc:public:cbdc_omg:04_doc:12_summary:start#benefits| Benefit Considerations ]] ||| |
| - | | **''P''** = [[cbdc:private:cbdc_omg:04_doc:12_summary:start#policy_considerations| Policy Considerations]] ||| | + | | **''P''** = [[cbdc:public:cbdc_omg:04_doc:12_summary:start#policy_considerations| Policy Considerations]] ||| |
| - | | **''R''** = [[cbdc:private:cbdc_omg:04_doc:12_summary:start#risks| Risk Considerations ]] ||| | + | | **''R''** = [[cbdc:public:cbdc_omg:04_doc:12_summary:start#risks| Risk Considerations ]] ||| |
| - | | **''D''** = [[cbdc:private:cbdc_omg:04_doc:12_summary:start#design| Design Considerations]] ||| | + | | **''D''** = [[cbdc:public:cbdc_omg:04_doc:12_summary:start#design| Design Considerations]] ||| |
| </table> | </table> | ||
cbdc/public/cbdc_omg/04_doc/20_comments/dsn/q15/start.1652058956.txt.gz · Last modified: 2022/05/08 21:15 by nick
