Talk:Central bank digital currency

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Renaming to "central bank digital currency" ?
Hello, first thank for whoever started this article. Very much needed! May I suggest if there is any prominent reason why this has been titled "Digital Fiat currency"? It seems like the concept has been baptized "central bank digital currency" by most central banks (cf references) so the later terminology would be in my view the more appropriate one. I'll proceed to the change unless major disagreements appear in the coming 2 weeks. Stanjourdan (talk) 09:18, 10 November 2017 (UTC)


 * In the absence of any comments, I have processed with renaming the page today.Stanjourdan (talk) 12:50, 3 December 2017 (UTC)


 * Thank you for your interest in the article. I wanted to clarify the difference between Central Bank Digital Currency and Digital Fiat Currency and see if you'd be willing to revert back to the original page name and article version (https://en.wikipedia.org/w/index.php?title=Central_Bank_Digital_Currency&oldid=796947181). Thanks in advance for your consideration.


 * The term “Digital Fiat Currency (DFC)” and the term “Central Bank Issued Digital Currency (CBDC)” have different meanings and cannot be used interchangeably. A Digital Fiat Currency (DFC) is the legal tender and currency of the nation. It is the digital form of the same value and has the same legal status as other forms of fiat currency. DFC possesses the same characteristics as that of paper fiat currency. Fiat currency is declared legal tender by government regulation and law. For example, in Kenya, it is the Kenyan Shilling, in India it is the Indian Rupee, in Brazil it is the Brazilian Real and so on. DFC is the digital form of fiat notes and coins issued and legalized by the issuing authority of a nation (most commonly the country’s Central Bank). DFC, like its physical counterpart, is ubiquitous and interoperable.  It is a subset of the monetary base (M0) and is a final and instant settlement of debt.  As legal tender issued by the entity empowered by the law, such as the Central Bank, DFC is a trusted instrument, and is the common unit of account, store of value and medium of exchange.  It is a liability on the Central Bank.  Just like paper currency, DFC does not require the pubic to hold an account at the central bank.


 * In contrast, a Central Bank Digital Currency (CBDC) can be an entirely different “thing”. Just like the Bitcoin network issues Bitcoins, a central bank can issue its version of a “bitcoin”.  It is not necessarily legal tender and it is not necessarily sovereign currency.  It is another “CryptoCoin” just like Bitcoins, Litecoins and Ethereum.  Although CBDC is understood to be a digital currency issued by the Central Bank, it does not carry the same basic principles upheld by a DFC.  The definition of a CBDC has been discussed with differing characteristics than that of physical fiat currency.  In contrast to DFC, CBDC may be a settlement balance.  CBDC may require the general public to hold central bank accounts.  Most importantly, CBDC is not defined as fiat, and therefore, it is not accurate to form an immediate parallel between CBDC and Digital Fiat Currency. Justin Goldsborough (talk) 23:00, 27 December 2017 (UTC)


 * Hi Justin. Thanks for the clarification. I still have however strong preference for keeping CBDC as the main umbrella term, for various reasons listed below, but I hope we can find a common ground?

1. There is a significant overlap between CBDC and DFC. Most of the literature on CBDC referenced in the article defines CBDC very closely with your own definition of DFC (legal tender, equivalent to physical cash, part of m0, liability of CB). Whether people can have an account at the CB is an optional feature in my opinion.

2. As far as I know, talks about bitcoin-like schemes issued by central banks are fringe and usually not described as "CBDC“.

3. DFC seems in fact to be a specific CBDC proposal, which itself is a sub-category of digital currency. We could of course create different articles for both concepts, but given the large and fast-growing literature on CBDC, wikipedia still should have a page on CBDC., while DFC seems to be pretty much a niche, lower-priority topic. It makes more sense to prioritize the development of the CBDC entry.

4. I think we should acknowledge that this whole topic is still very much emerging and fast-changing. Terminologies and concept definitions are therefore not yet 100% clear neither set in stone. In the midst of this uncertainty, I would suggest adopting an open approach by keeping the current page on CBDC as main umbrella page for all kind of legal tender digital currencies issued by central banks.

Moving forward, I would suggest improving the article in this way:
 * Improving the definition by listing the key possible characteristics of CBDC / DFC (possibly with a table);
 * Making it clear in the article that there are different ways to implement a form of CBDC, with different characteristics, use cases, technology and objectives; make it clear that DFC is a proposal on its own, not a generic term.
 * Add more academic references about DFC;

I hope this helps?! happy new year btw Stanjourdan (talk) 10:09, 3 January 2018 (UTC)


 * Hi. Happy new year to you as well. Appreciate you sharing your reasoning. Agree with the majority of it, but have one additional edit request for you consider. NOTE: I am proposing this edit on behalf of eCurrency. I am a paid editor for various brands and am aware of the COI guidelines. Hopefully this additional information will help clarify the relationship between Digital Fiat Currency and the Central Bank.

Would you consider changing this sentence from the article (second paragraph under Characteristics header): "As such, digital fiat money cannot be considered as a liability of the central bank (it is similar to outside money).” I believe the opposite is actually true and propose changing that sentence to read as follows: "As such, DFC is a liability of the central bank just as physical currency is. Also, what do you think about adding the acronym (DFC) after first reference of digital fiat currency and then using DFC on all additional references?

Lastly, I am fine with this article content living under the Central Bank Digital Currency umbrella as you've proposed. We do plan to submit a redirect request so that a Digital Fiat Currency article exists. I'll submit that request, but wanted to mention it. Thank you in advance for your consideration of this edit and for your additions to this article. Justin Goldsborough (talk) 19:00, 31 January 2018 (UTC)

I love this suggestion as the title for CBDC is often referred to as Central Bank Digital Dollars, Central Bank Digital Cash, Central Bank Digital Fiat, Fiat Digital Dollars and it therefore makes sense to include them Gabrielabed (talk) 10:57, 23 February 2020 (UTC)

@Stanjourdan and @Justin Goldsborough - thank you for maintaining this page and upkeeping it. I believe there is an important distinction that should be made. CBDC is not possible without the double spend problem being solved. It was not possible prior to distributed ledger technology and you have older examples like Canada's mintchip which was proposing a digital currency but failed due to poor implementation design of the double spend issue. Gabrielabed (talk) 11:01, 23 February 2020 (UTC)

"edit request"
NOTE: I am proposing this edit for FleishmanHillard on behalf of eCurrency. I am a paid editor for various brands and am aware of the COI guidelines. Hopefully this additional information will help clarify the relationship between Digital Fiat Currency and the Central Bank.

Would you consider changing the sentence: "As such, digital fiat money cannot be considered as a liability of the central bank (it is similar to outside money).”? I believe the opposite is actually true and propose changing it to read as follows: "As such, DFC is a liability of the central bank just as physical currency is." Justin Goldsborough (talk) 17:39, 2 March 2018 (UTC)

Reply 26-MAR-2018
Statements regarding whether or not cryptocurrencies are liabilities is a determination which should involve the input of many editors, not just you and I. I suggest that this topic requires further discussions before a change can be made. Regards,      Spintendo       22:40, 26 March 2018 (UTC)

Reply 13-APR-2018
Thanks for your response. Would you recommend a Requests for comment to involve additional editors? Or a different approach? Also, in an attempt to build on this discussion, including two other sources below that claim digital fiat currency is a liability of the central bank. Appreciate your thoughts on next steps.

Committee on Payments and Market Infrastructures (page 3, first paragraph under Taxonomy):

Coindesk (5th paragraph in the Digital Currency Attributes section):

Justin Goldsborough (talk) 21:14, 13 April 2018 (UTC)

RfC about digital fiat currency definition
Should digital fiat currency be defined as a liability of the central bank? See sources above.

DISCLOSURE: I proposed the original edit March 2 for FleishmanHillard on behalf of eCurrency. I am a paid editor for various brands and am aware of the COI guidelines. RfC relisted by Cunard (talk) at 07:43, 20 May 2018 (UTC). Justin Goldsborough (talk) 17:45, 18 April 2018 (UTC)


 * Comment - summoned by bot. I think we (or at least I) need more context to be able to help with this discussion.  What is the main issue here?  Why would it matter one way or the other whether or not we list the currency as a liability, and who would make the claim for either argument? Can you flush your request out to better make your case? TimTempleton (talk)  (cont)  19:06, 3 May 2018 (UTC)
 * Comment Invited by the bot. I echo what TimTempleton said.  North8000 (talk) 11:57, 7 May 2018 (UTC)
 * Comment Thanks TimTempleton and North8000. I can provide a claim for why digital fiat currency should be considered a liability of the Central Bank. Currently the article states, "Digital fiat currency is part of the base money supply, together with other forms of the currency. As such, digital fiat money cannot be considered as a liability of the central bank (it is similar to outside money).” This statement is false because base money supply issued by the central bank and all forms of currency are a liability of the central bank. As digital fiat currency is part of base money supply, therefore it too is a liability of the central bank. The two sources included below support this point.
 * Committee on Payments and Market Infrastructures (page 3, first paragraph under Taxonomy):
 * Coindesk (5th paragraph in the Digital Currency Attributes section):


 * Justin Goldsborough (talk) 03:23, 15 May 2018 (UTC)


 * Support The current formulation "As such, digital fiat money cannot be considered as a liability of the central bank" failed verification. It appears the unsourced text that follows it stating "(it is similar to outside money)." could be WP:OR. Your provided text Bank for International Settlements (a clear WP:RS) states "CBDC is not a well-defined term. It is used to refer to a number of concepts. However, it is envisioned by most to be a new form of central bank money. That is, a central bank liability, denominated in an existing unit of account, which serves both as a medium of exchange and a store of value." — Preceding unsigned comment added by Jtbobwaysf (talk • contribs) 18:05, 17 May 2018 (UTC)


 * Comment: RfC relisted. and, do you have any further comments after Justin Goldsborough's clarifications? Cunard (talk) 07:43, 20 May 2018 (UTC)


 * Comment - without getting too deeply into the nuances of cryptocurrency and international banking liabilities, if both sides are well argued, why wouldn't a solution be "There are disagreements about whether cryptocurrency should be treated as a bank liability in the traditional sense. According to etc etc etc, it is, because ..., but according to etc etc etc, it is not, because ...." Source both sides by highlighting the issues, let the reader decide. TimTempleton (talk)  (cont)  18:36, 20 May 2018 (UTC)


 * Support Justin Goldsborough's argument but they did not make a specific proposal. As a sidebar, it is logical......a currency issued by a bank is an obligation of the bank.  I said "sidebar" because in Wikipedia, sources are more more important than logical analysis by editors. So let's move on to sources.   The sourcing and interpretation of it for the "not a liability" is problematic. The source for the "is not a liability" basically said that cryptocurrencies are not a liability.   There are two ways to take this.  One is an absurd overgeneralization...that every possible crypto protected currency is not a liability.  The other is to interpret it as referring to the common cryptocurrencies/ common meaning of cryptocurrencies, which is along the lines of bitcoin, not issued or supported by any bank or government.  The latter is the only plausible choice and it does not support "not a liability for an issuing bank", so "not a liability" fails verification. So, IMO the "not a liability" clearly can't stay in the article.   Justin Goldsborough gave three references to support the "is a liability of the bank" viewpoint.  All were large and I admittedly only skimmed them, but that quick skim  seems to buttress his argument.
 * As an additional note, to me it appears that Jtbobwaysf's post is self conflicting and I would request them to clarify.   It starts with supporting the current "is a liability" version, but their arguments seem to argue against that statement and thus, regarding the existing statement, in favor of Justin Goldsborough's argument.  Sincerely,  North8000 (talk) 23:44, 20 May 2018 (UTC)


 * Support* First, as per the BIS quote. Second, that is the whole point of the article. Dryfee (talk) 23:21, 1 June 2018 (UTC)


 * Comment Per your comment on March 26, many editors have commented via the RfC above. Multiple comments are in support of editing the article to say digital fiat currency is a liability of the Central Bank. Based on this feedback, do you now feel we could go ahead and make the edit originally requested: Edit the sentence in the second paragraph under the Characteristics section from "As such, digital fiat money cannot be considered as a liability of the central bank (it is similar to outside money)." This sentence as it reads is false because base money supply issued by the central bank and all forms of currency are a liability of the central bank. As digital fiat currency is part of base money supply, therefore it too is a liability of the central bank. The two sources included below support this point.
 * Committee on Payments and Market Infrastructures (page 3, first paragraph under Taxonomy)
 * Coindesk (5th paragraph in the Digital Currency Attributes section)
 * Thanks for your consideration, Justin Goldsborough (talk) 03:08, 4 June 2018 (UTC)

Edit request
NOTE: I am proposing this edit for FleishmanHillard on behalf of eCurrency. I am a paid editor for various brands and am aware of the COI guidelines.

On March 2, 2018 I proposed the following edit request...Would you consider changing the sentence: "As such, digital fiat money cannot be considered as a liability of the central bank (it is similar to outside money).”? I believe the opposite is actually true and propose changing it to read as follows: "As such, DFC is a liability of the central bank just as physical currency is."

Below are two sources that back this argument that digital fiat money is a liability of the Central Bank. Also, per the rfc above, multiple editors have agreed that digital fiat money is a liability of the Central Bank and have asked that the edit be made to the article. But the edit has still not been made. Based on the points made sources provided and the editor consensus in the rfc, would you please go ahead and make the proposed edit?

Committee on Payments and Market Infrastructures (page 3, first paragraph under Taxonomy):

Coindesk (5th paragraph in the Digital Currency Attributes section):

Justin Goldsborough (talk) 21:06, 25 June 2018 (UTC)

The consensus of that RfC was that "the article should state that CBDC is a central bank liability, but the issue of how this should be implemented was not discussed." (If this is not the RfC you're referring to, please state otherwise.) Owing to that consensus, which seems at odds with your request, and to the lack of agreement on wording with respect to how it should be mentioned, I don't see how this is an actionable edit request.  spintendo   22:03, 25 June 2018 (UTC)
 * I don't follow. How is his suggestion not in line with the consensus? —Compassionate727 (T·C) 22:44, 26 June 2018 (UTC)


 * Thanks for the continued discussion. I was under the impression consensus from the RfC was clear that the way the sentence was currently stated (that digital fiat money cannot be considered as a liability of the central bank) was inaccurate and a change was warranted. Would appreciate your thoughts on next steps here to come to a resolution. Would you recommend another RfC? Other thoughts? Thanks. Justin Goldsborough (talk) 14:49, 11 July 2018 (UTC)
 * That was my reading of the consensus and what I intended to communicate when I made the closure. I think another RfC would be overkill; I'm willing to make the edit for you as-is, though I would like to know what was thinking above. —Compassionate727 (T·C) 20:10, 11 July 2018 (UTC)
 * Well, it's been 10 days. Seeing as has run away, I have made the edit. Please let me know if you need anything else. —Compassionate727 (T·C) 22:16, 21 July 2018 (UTC)

CBDC = DLT Based
One can argue it is not possible to have a CBDC without distributed ledger technology. If you look at all previous examples prior to Bitt.com's concept of a DLT based CBDC, then you would notice they all failed due to issues around security, double spend and deployment. Gabrielabed (talk) 11:02, 23 February 2020 (UTC)

commercial banks practice fractional (disputed/dated)
The following sentence is not exact anymore: For example, commercial banks practice fractional reserve banking while CBDCs are fully reserved.

I replace it with the following sentence:

Indeed, in the last century, commercial banks have created money thanks the deposits and other ways. They have used 2 methods: fractional reserve banking and zero reserve.

Zero reserve: today commercial banks in some countries (US, UK, EU, etc) don't need a reserve requirement anymore [1][2] [3] [4]. Indeed every time a subject (a person, a corporation, etc) asks for a loan, and that subject offers a loan guarantee (a private property like a car, a building, etc) the bank creates temporarily a new deposit (money), lends these money to him, and when the borrower pays off the loan plus the interests the initial deposit is deleted, and the bank keeps the interests.

CBDCs are fully reserved, so if a person want this form of money, he just buys it from the central bank. In this case commercial banks don't create debt, or new money, and don't earn any interests.

Sources.

1)Reserve Requirements.

As announced on March 15, 2020, the Board reduced reserve requirement ratios to zero percent effective March 26, 2020. This action eliminated reserve requirements for all depository institutions. https://www.federalreserve.gov/monetarypolicy/reservereq.htm

2) Can banks individually create money out of nothing? The theories and the empirical evidence.

This study establishes for the first time empirically that banks individually create money out of nothing. https://www.sciencedirect.com/science/article/pii/S1057521914001070

In his Theory of Credit Macleod (1891) put it this way:

“A bank is therefore not an office for “borrowing” and “lending” money, but it is a Manufactory of Credit.”

Macleod (1891: II/2, 594)

According to the credit creation theory then, banks create credit in the form of what bankers call ‘deposits’, and this credit is money.

But how much credit can they create?

Wicksell (1907) described a credit-based economy in the Economic Journal, arguing that

“The banks in their lending business are not only not limited by their own capital; they are not, at least not immediately, limited by any capital whatever; by concentrating in their hands almost all payments, they themselves create the money required….”

“In a pure system of credit, where all payments were made by transference in the bank-books, the banks would be able to grant at any moment any amount of loans at any, however diminutive, rate of interest.”

3)Why Banks Don't Need Your Money to Make Loans.

Banks in the Real World.

In today’s modern economy most money takes the form of deposits, but rather than being created by a group of savers entrusting the bank withholding their money, deposits are actually created when banks extend credit (i.e., create new loans). As Joseph Schumpeter once wrote, “It is much more realistic to say that the banks 'create credit,' that is, that they create deposits in their act of lending than to say that they lend the deposits that have been entrusted to them.” https://www.investopedia.com/articles/investing/022416/why-banks-dont-need-your-money-make-loans.asp

4)The truth is out: money is just an IOU (bank account), and the banks are rolling in it

To quote from its own (Bank of England) initial summary: "Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits (bank account)" ...

"In normal times, the central bank does not fix the amount of money in circulation, nor is central bank money 'multiplied up' into more loans and deposits."

In other words, everything we know (fractional reserve) is not just wrong, it's backwards. When banks make loans, they create money. This is because money is really just an IOU (I own you=bank account)....

There's really no limit on how much (money and loans) banks could create, provided they can find someone willing to borrow it.

https://www.theguardian.com/commentisfree/2014/mar/18/truth-money-iou-bank-of-england-austerity

5)German Central Bank Admits that Credit is Created Out of Thin Air.

https://www.businessinsider.com/german-central-bank-says-credit-is-created-out-of-thin-air-2010-3?r=US&IR=T

Most people think that banks lend solely from their base of deposits. Some also know that with fractional reserve banking, they can loan out many times more than they actually have in reserves.

But very few people (with the exception of those in the banking industry and financial experts) know where credit really comes from.

(1) Each private bank "creates" loans out of thin air by entering into binding loan commitments with borrowers (of course, corresponding liabilities are created on their books at the same time. But see below); then

(2) If the bank doesn't have the required level of reserves, it simply borrows them after the fact from the central bank (or from another bank);

(3) The central bank, in turn, creates the money which it lends to the private banks out of thin air.

It's not just Bernanke ... the central banks and their owners - the private commercial banks - have been running the printing presses for hundreds of years.

Of course, as I pointed out Tuesday, Bernanke is pushing to eliminate all reserve requirements in the U.S. If Bernanke has his way, American banks won't even have to borrow from the Fed or other banks after the fact to have reserves. Instead, they can just enter into as many loans as they want and create endless money out of thin air (within Basel I and Basel II's capital requirements - but since governments are backstopping their giant banks by overtly and covertly throwing bailout money, guarantees and various insider opportunities at them, capital requirements are somewhat meaningless).

The system is no longer based on assets (and remember that the giant banks have repeatedly become insolvent) It is based on creating new debts, and then backfilling from there.

https://www.businessinsider.com/german-central-bank-says-credit-is-created-out-of-thin-air-2010-3?r=US&IR=T

6)how is money created.

https://www.bankofengland.co.uk/knowledgebank/how-is-money-created

Overhaul of this section
After carefully going through the topics, it has come to my attention that there are few instances of an active and functioning CBDC example. Moreover, there is also content claiming that a CBCD does not need blockchain/DLT technology, however, there are examples of instances where the blockchain technology works to improve current services ie: "using a blockchain for digital asset management allowed NBC and Soramitsu to implement fiat-backed digital representations of the Khmer riel and US dollar that would be accessible for wholesale interbank transactions as well as everyday retail payments." from https://www.weforum.org/agenda/2021/08/cambodias-digital-currency-ishowing-other-central-banks-the-way/

Metaxolotl (talk) 09:45, 21 February 2022 (UTC)


 * No, we're not here to promote Soramitsu. MrOllie (talk) 13:00, 21 February 2022 (UTC)

Essentially Notepad
We're talking about currency here. This is just fiat in newspeak and doesnt need its own article. See Notepad article — Preceding unsigned comment added by 217.87.181.52 (talk) 20:32, 23 April 2022 (UTC) https://en.wikipedia.org/wiki/Notepad_(disambiguation) 217.87.181.52 (talk) 20:33, 23 April 2022 (UTC)

Wiki Education assignment: Research Process and Methodology - FA22 - Sect 200 - Thu
— Assignment last updated by Kaisery (talk) 20:57, 3 December 2022 (UTC)

A possible citation
Newsweek has a strongly worded critique of using a CBDC system: https://www.newsweek.com/cbdcs-will-end-american-freedom-opinion-1673676 2600:6C67:1C00:5F7E:1DEF:F379:3CE0:B974 (talk) 23:15, 14 December 2022 (UTC)

Mining
While I don't expect an explanation of mining in this article, there should be more about it than the one glancing use of the term. In particular, it has been claimed that CBDCs can be created without mining. Since mining is very intensive of computer use, it is considered a significant driver of global warming. Thus, this non-mining character would be a positive factor for CBDCs. 2600:6C67:1C00:5F7E:1DEF:F379:3CE0:B974 (talk) 23:20, 14 December 2022 (UTC)

Resilience against catastrophes
Given its centralized structure, a CBDC may or may not amplify the destruction of certain catastrophic events such as very large natural disasters or sophisticated nation-state cyberattacks. The fragmented nature of most nations’ current systems tends to confine damage to smaller chunks of an economy. I expect this is part of central banks’ planning; this article should address this as reliable sources become available. — A. B. (talk • contribs • global count) 15:58, 18 January 2023 (UTC) A. B. (talk • contribs •  global count) 15:58, 18 January 2023 (UTC)

"Cdbc" listed at Redirects for discussion
The redirect [//en.wikipedia.org/w/index.php?title=Cdbc&redirect=no Cdbc] has been listed at redirects for discussion to determine whether its use and function meets the redirect guidelines. Readers of this page are welcome to comment on this redirect at  until a consensus is reached. Utopes (talk / cont) 04:19, 5 October 2023 (UTC)

Unified Ledgers, Total Tokenization, Project Agora, Finternet ...
Hi, mCBDCs are embedded in blueprints by Bank for International Settlements. Deposits and Real World Assets (RWA) have to be tokenised, unified into a personal (identity) ledger (unified ledger), a new financial architecture, named Finternet by Mr. Carstens (General Manager BIS). Recently project Agora has been started. CGB 41.66.99.0 (talk) 07:28, 16 July 2024 (UTC)