cbdc:public:cbdc_omg:04_doc:20_comments:dsn:q15:start
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cbdc:public:cbdc_omg:04_doc:20_comments:dsn:q15:start [2022/05/16 22:06] nick |
cbdc:public:cbdc_omg:04_doc:20_comments:dsn:q15:start [2022/06/17 19:22] (current) terrance |
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| | [[cbdc:public:cbdc_omg:04_doc:20_comments:dsn:start| Return to Design Considerations ]] | <WRAP> | | [[cbdc:public:cbdc_omg:04_doc:20_comments:dsn:start| Return to Design Considerations ]] | <WRAP> | ||
| <html><b> | <html><b> | ||
| - | <a href="mailto:[email protected]?Subject=OMG CBDC Response: | + | <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? | Question: 15. Should a CBDC pay interest? If so, why and how? If not, why not? | ||
| ">Provide Feedback</a></b> | ">Provide Feedback</a></b> | ||
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| The answer depends on the architecture, design and implementation. (See: [[cbdc:public: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:public:cbdc_omg:04_doc:20_comments:dsn:q15:start| 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.). |
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| * 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? | ||
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| [[cbdc:public:cbdc_omg:04_doc:20_comments:dsn:q15:start| 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 [[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. | ||
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| <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:public: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> | ||
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| [[cbdc:public:cbdc_omg:04_doc:20_comments:dsn:q15:start| 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> | ||
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| 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. | | ||
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| - | 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> | ||
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| )) and [[cbdc:public: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 | | ||
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| [[cbdc:public:cbdc_omg:04_doc:20_comments:dsn:q15:start| 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: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''**]: | + | 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 | ||
cbdc/public/cbdc_omg/04_doc/20_comments/dsn/q15/start.1652753207.txt.gz · Last modified: 2022/05/16 22:06 by nick
