You Will Be Shocked By How Much Money Is Being Pulled Out Of U.S. Banks, And Now The Biggest Bank In Germany Is In Trouble

There is are potential upsides to a CBDC which should be much faster speed and much lower transaction costs.

There are many downsides real and potential, including of course federal intrusion and spying on individual and organizational transactions. I would argue there are 1st and 4th Amendment concerns and simply would not trust that the ledger keepers would respect freedom of association and freedom from warrantless searches of financial data.

Now add another factor - Visa, Mastercard, Discover, Amex, Goldman Sachs and other card issuers love their 3% merchant fees and love the interest they charge. I am not sure how they fit into a CBDC system but somebody will be lending money on that blockchain. And the banks love their wire fees and other fees. Blockchains only charge fees for moving money and generally speaking it has been quite low (though relative to the token, it could be high it should really only cost a few cents per transaction).

If all deposits were required to be backed up by real funds actually in the bank

Then they would just be vaults. The purpose of a bank is to hold your money AND to lend it out to qualified borrowers to earn interest. At least, that's the basic premise. It only becomes a problem if, as in the classic movie, everyone wants to withdraw all their cash at one time.

As for the recent bank failures, a lot of that has to do with just poor investment/oversight/management; e.g. they put depositors cash into treasuries (which they are now required to do by law) but they bought long term treasuries at low rates and now the yields on those T-Bills are much higher, so if they had to liquidate the old low-yield bonds they have to dump them at a 10%-15% discount to book value. Proper money management they would have hedged the interest rate, or, kept it in short term treasuries so they could roll them over. But ultimately they need to lend it out at 2.5%-3% above Treasuries sometimes more - so people can buy homes or real estate for their businesses.

Of course, so much regulation all of this is mostly theory. Banks will 'originate' a loan but then sell it to investment groups so they aren't at risk and earn a small slice on the life of the loan. Who knows what else they do, what they are supposed to do, and how they do it? The bigger the bank and the broader their investment the more scams they can pull. The biggest Wall Street banks can make a sweetheart deal for a AAA+ credit large enterprise and still find a way to skim 16 different fees.

this is disingenuous.

the article at cnbc talks about FedNow, a new express payment mechanism that uses the existing monetary system but does the transactions electronically.

this is a far cry from digital currency or centralized crypto currency.

for one this, FedNow gives no access to your money other than what you send them. they cannot access your ‘digital wallet’ and all your digital currency it contains... as there is no digital wallet nor any digital currency.

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