Fed explores 'once in a century' bid to remake the U.S. dollar

[brooklynite]

Source: Politico

The Federal Reserve is taking what may be the first significant step toward launching its own virtual currency, a move that could shake up banks, give millions of low-income Americans access to the financial system and fortify the dollar's status as the world’s reserve currency.

The idea of creating a fully digital version of the U.S. dollar, which was unthinkable just a few years ago, has gained bipartisan interest from lawmakers as diverse as Sens. Elizabeth Warren (D-Mass.) and John Kennedy (R-La.) because of its potential benefits for consumers who don’t have bank accounts. But it’s also sparking strong pushback from those with the most to lose: banks.

...snip...

The Federal Reserve Bank of Boston and the Massachusetts Institute of Technology’s Digital Currency Initiative are aiming next month to publish the first stage of their work to determine whether a Fed virtual currency would work on a practical level — an open-source license for the most basic piece of infrastructure around creating and moving digital dollars.

But it will likely be up to Congress to ultimately decide whether the central bank should formally pursue such a project, as Fed Chair Jerome Powell has acknowledged. Lawmakers on both sides of the aisle are intrigued, particularly as they eye China’s efforts to build its own central bank digital currency, as well as the global rise of cryptocurrencies, both of which could diminish the dollar’s influence.

Read more: https://www.politico.com/news/2021/06/12/fed-remake-us-dollar-493548

[AllaN01Bear]

1. i would like to see a redesign of the real dollar and other currencey like in mexico the moneys are

a type of plastic and cant be forged . uk has gone that route , i think.

[Angleae]

2. Quite a few countries have.

Canada, Vietnam, Brunei, Papua New Guinea, Maldives, Mauritania, Nicaragua, Vanuatu, Antigua and Barbuda*, Dominica*, Grenada*, Montserrat*, Saint Kitts and Nevis*, Saint Lucia Saint Vincent and the Grenadines* have completely switched to polymar notes (*common currency of Eastern Caribbean States)

The United Kingdom, Nigeria, Cape Verde, Chile, The Gambia, Trinidad and Tobago, Vietnam, Mexico, Singapore, Malaysia, Botswana, São Tomé and Príncipe, North Macedonia, the Russian Federation, Solomon Islands, Samoa, Morocco, Albania, Sri Lanka, Hong Kong, Israel, China, Kuwait, Mozambique, Saudi Arabia, Isle of Man, Guatemala, Haiti, Libya, Mauritius, Costa Rica, Honduras, Angola, Namibia and Lebanon have partially converted.

https://en.wikipedia.org/wiki/Polymer_banknote

[OneCrazyDiamond]

22. Maybe plastic from cellulose.

Not from oil though. We need to keep the remaining oil in the ground.

[bucolic_frolic]

3. Fed is late to the game

Maybe they're afraid of losing control?

Financial gurus make all sorts of predictions. They will make cash illegal, or tax its spending or holding or depositing. Why have they waited so long? Has there been any benefit to allowing crypto such a head start? Is that where the money from Fed asset purchases has wound up? Isn't there a lot of tax cheating going on?

Everyone will be a millionaire mining crypto. Why can I buy it from the change in my pocket the CoinStar machine but my bank has no idea what's going on? What would I do with it when I get some? Does it pay a dividend or interest? I'm really finding a spare pair of new tires preferable to crypto at this point.

[jimfields33]

5. It'd be a heck of a lot cheaper to phase out physical bills and coins

and just used debit and credit cards. Would save the government a mint. Plus you can close down the four bill and coin buildings saving even more.

[twodogsbarking]

17. There is a charge for credit cards that far exceeds

the cost of producing cash and coins.

[OldBaldy1701E]

30. Which is why the banks want us to go 'paperless'.

And, they will probably get away with it. Just as replacing simple incandescent bulbs with dangerous, mercury filled ones... harder to throw away and harder to recycle... because reasons (they can charge more for them for one thing). One should assume that if it is something the rich like, it is probably something that the rest of us will not.

[twodogsbarking]

33. Things change and then they change again.

Stay tuned.

[OldBaldy1701E]

35. Heh... for most... (n/t)

[twodogsbarking]

37. Everyone pays.

Even if you don't use a card.

[OldBaldy1701E]

38. And, even if you don't think you are going to pay. (n/t)

[Sgent]

36. For credit cards yes

but debit cards are much cheaper than cash for a merchant to handle.

[louis-t]

4. I keep wondering if the so-called "coin shortage"

has anything to do with the push to crypto. I understand "glass shortage" as people weren't allowed to return bottles and a lot of people threw them away rather than have them pile up. I do not understand "coin shortage".

[bucolic_frolic]

6. They sure look at you strange when you pay cash or have coins

[question everything]

26. Many, including my spouse, have not used cash since the beginning of the pandemic

[flibbitygiblets]

34. Same (exception: pot store)

I never use debit cards either. When used for budgeted household purchases (groceries, fuel, insurance and utilities), AND paid off each month, credit cards are safest while also earning cash back (or travel points).

[Fiendish Thingy]

7. Instead of creating a wholly digital currency, why not give people free bank account through USPS?

It has been discussed before, and once de Joy is gone, could be easily set up. Banks would freak out, but that is one solution. I don’t think the market will like the US moving to digital currency.

[burrowowl]

8. Yes the USPS should have banking services!

[JI7]

9. I don't think the issue is about inability to get bank amounts

it's that they don't make or have enough money to make it worth getting even if they can open up one without fees.

[csziggy]

23. USPS used to have a banking system

It was phased out in the 1960s.

Postal banking could help the USPS and underserved communities
Written by Matthew Goldberg April 28, 2021

{SNIP}

It’s been a little more than 50 years since the Postal Savings System existed.

It was established via a 1910 Act of Congress, according to the USPS website. Its goal was to get people in the U.S. to not hide their money.

According to the USPS, some immigrants banked at post offices in their previous country. The post office paid depositors 2 percent and then redeposited the money into local banks, where it earned 50 basis points (0.5 percent) more. That spread helped fund the Postal Savings System.

People could deposit money in certain increments. Postal Savings System deposits earned 2.5 percent from July 1, 1911 to July 1, 1935. U.S. savings bonds took the place of postal savings bonds in 1935.

In 1966, the USPS stopped accepting deposits and the Postal Savings System ended in 1967.

More: https://www.bankrate.com/banking/postal-banking-then-and-now/

[PoliticAverse]

10. "This will not end well." n/t

[Joinfortmill]

11. Its coming, I think.

[HariSeldon]

12. I see it as the logical step

...which is not to say I'm super excited about it. But I am so done having my card info stolen. The credit card (and grafted on debit card) system is so terribly insecure. The fact so many legitimate jobs exist investigating, correcting, and prosecuting fraudulent transactions indicates quite clearly that the transactional system with cards does not possess enough security. A blockchain-type system with a public ledger and strong cryptography would be a significant improvement, even if it has some pitfalls.

[OldBaldy1701E]

31. Almost as if it was planned, eh?

BTW, How is that encyclopedia coming?

(So, Salvor Hardin is one of my fictional heroes. I can read the scene at the coronation every day. It never gets old.)

[Brainfodder]

13. Progess..... now can we get HC for all immediately too please?

Priorities, let's have some!

People going broke over this covid-19 and if that has to be the catalyst in the history books, so be it, long overdue!

[DFW]

14. Not until the last «Was hacked into» headline is ten years in the past

And maybe not even then. The more information a dictatorship has on its citizens, the easier it is to control them, and perpetuate itself. A system that makes every single transaction you ever make available to some bureaucrat with the right software makes my skin crawl. This goes double if said bureaucrat acquires the ability to alter or manipulate the information to which he or she has access.

I will continue to use cash for every private transaction where it’s practical for me. Not for car rentals or hotels or stuff like that, but for meals, groceries, entertainment, household items, gas for a car, even a guitar, hell yes I prefer cash. Maybe it‘s just my last hurrah against the Überwachungsstaat, but I will make my stand there all the same.

I spend very little time in the UK, so I don‘t know their current stance on this, but their highest banknote is the £50 note, not even $75. But in Switzerland, the 1000 franc note is still very much used (over $1100 at today‘s rates, though at $100 for a modest lunch for two in Zürich or Geneva, I see why they need it!). Switzerland, by the way, has also switched over to polymer currency, as did Romania years ago.

[NBachers]

15. It's going to happen

[intrepidity]

16. The genius of Bitcoin is the 21 million coin cap

A federal digital dollar will never enjoy that advantage.

[Thyla]

18. Government backed centralised cryptos

Are a bit of a giggle.

By all means please do it but it does defeat the purpose of a decentralised currency.
Once implemented and people even begin to understand what it's about they'll flock to the anonymity of real cryptos.

[The Jungle 1]

19. No American should support a bank. Go to the credit union.

Never support Wells Fartgo. They are filthy and corrupt.

[brooklynite]

28. I go to the banks that provide the best interest rates on savings. Never seems to be a CU

Vio Bank 0.61 %
Comenity Direct 0.55 %
BrioDirect 0.55 %
CFG Community Bank 0.52 %
Cross River Bank 0.51 %
Live Oak Bank 0.50 %
Goldman Sachs Bank USA 0.50 %
Ally Bank 0.50 %
Spring Bank 0.50 %
CIT Bank 0.50 %

[twodogsbarking]

20. The dollar has been remade

it is now worth a dime.

[lonely bird]

21. It is mostly digital now

Look at automatic deposits and payments.

This is going to devolve into the “real money” vs “fiat currency” argument. ALL money, including gold is fiat. Gold has no monetary value whatsoever beyond the fact that humans decided it was money because it doesn’t corrode, is hard to get and looks pretty. Yes, it has other uses but that merely makes it a commodity that can be purchased for its use.

When money goes digital there will still be a gray/black market where people will lack for access to the banking system. Perhaps barter will return in those instances. Perhaps pockets or groups of people will establish “currency” for use in that group for transacting goods and services.

What is important to notice is that the biggest potential issue this political economy faces is the loss of the status of being the world’s reserve currency. How will that impact the ability of the U.S. to issue debt and what happens when there is sufficient upheaval as countries have made a run for Treasuries like they do now?

[BumRushDaShow]

24. "give millions of low-income Americans access to the financial system"

This is ridiculous. This past year's pandemic nightmare exposed how many had little or no access to internet service (particularly families with children who had to go online), let alone computers, and many only have limited types of cell phone service with restricted data access.

I am guessing they are trying to "modernize" but to suggest this would somehow give access to the less fortunate, is a joke. And even if (which I assume they may be thinking about) they have those folks use some kind of debit card to track the balances, there would need to be ATM-style terminals that recognize those cards and are networked to those accounts. It's bad enough that you already have thieves blowing up terminals to get cash boxes out of them.

[question everything]

25. I think that the paper dollar is widely used all over the world

I think that many people in developing countries may suffer. But this may have been true some 30 years ago..

[yaesu]

27. Interesting, hope they include the USPS in the new systemas a way of bypassing gouging banksters. nt

[Javaman]

32. whatever became of the Harriet Tubman 20?

I know the orange asshole crushed it but will it be revived?