this post was submitted on 29 Nov 2023
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Are we really supposed to believe that people who say things like that have any chance of getting it right when they design a digital currency?
Won't you think of the bankers? Do you want them to not only lose access to interest rate free loans from everyone but also to reduce the probability of a bailout when their gambling addiction catches up with them? /S
It is a bit more complicated than that.
As a very very broad simplification, the value of a currency is dependent on the economic output in the area the currency is used. If the output increases, but the available currency remains the same, there is a deflation and if the output stagnates or lowers, while the currency amount increases, there is an inflation. Both are very bad for the economy at high rates and the go-to-solution is to have a stable small inflation.
The current concept is that the banks create (book) money by giving out loans and covering those loans at the central bank, which in turn increases or decreases the amount of currency in rotation, by setting an interest rate for that. That system would need to be remodelled entirely, if there is a digital currency, that replaces the book money of the banks and would be similiar to cash in terms of simply existing without interest rates in either direction. Now introducing a digital currency with default and unnegotiable interest rates for currency control, will not be very favorable with customers. In the end the banks do the same, but the customers still have the feeling that they could just cash it all out, or go to a different bank with different conditions. With the design of the digital currency that could no longer be viable.
The issue isn't banks fundamentally. It is the way that banks are deregulated, privatized and run by greedy fucks, who know that there bank is "too big to fail", so they can get away with holding the real economy hostage.
The wider context makes a bit more sense imo
Makes sense to me as a worry. It would be disruptive, though I'd hope it would be disruptive in a good way.
If you think inflation is bad, see what deflation does to economies.
The banks would never allow it because it would put them out of business. The real question is whether that's a good thing, and my gut feeling is that it probably is. They are just rent seeking and it likely provides negative value to the economy in real terms.
But I think even with the limits being proposed, it could at least be a good thing for people without a lot of money who tend to get bent over hard by the banks.