Has Brazil Invented the Future of Money?

An important feature of (some) crypto stablecoins is that they function like cash.

Cash is fungible. And cash in my wallet is not subject to being frozen like a bank account.

One can argue the merits of a digital cash for society. But a crypto-based digital cash is fundamentally different from a digital bank-based payment system.

I was just thinking that. He says the system has low transaction costs (free for individuals) and is fast (three seconds) instead of taking days. Sending money abroad is more expensive, but if you shop around for services instead of just paying what your bank charges it can be very cheap and fast.

In the UK we have bank transfers that settle in a maximum of two hours (much less usually, although I do not know whether it is as fast as the Brazilian system on average) and is free for individuals. It seems to be the norm globally. Is Krugman entirely unaware of how the rest of the world works?

The one things he is right about is that we do already have central bank digital currencies. Most currencies exist mostly in digital form (I cannot remember the exact number, but got GBP its well over 90%).

Exactly, it's a solution looking for a solved problem. The digital banking you listed out-perform crypto as well, and have heaps of checks and balances, auditing, and guarantees from central banks. All that will need to be reinvented for "crypto" shit, and they need to show some proof as to why it's better before they get the billions of buy-in required.

The Nordics also have instant C2C with Vipps/MobilePay. In Denmark it's $630 to a specific person per day. Send+receive $47k per year.

In South Africa we've had free, instant, interbank payments for more than a decade now.

> SEPA? IBAN-to-IBAN? iDEAL and many other integrated payment systems

None of these are really comparable to Pix, which occupies a different place in the market (although it also covers these use cases). It absorbs almost all P2P payments as well as business payments, where cards and cash were previously dominant.

> I would expect a Nobel prize winner, MIT and Princeton professor and New York Times contributor to be able to construct proper arguments not emotional outbursts:

¿Porque no los dos? This is is popular culture newsletter, not a peer reviewed journal. He can write articles that are more or less wonkish, geared more or less to academics or the general public, as he feels.

> In Canada during Covid protest the government gave itself emergency powers and shut down bank accounts of protesters.

They did not shut down bank accounts of protestors but of occupiers. Occupiers that did not disperse when ordered and were deemed a threat to public order. An inquiry mandated by the legislation found the events met the threshold for invocation:

* https://en.wikipedia.org/wiki/Public_Order_Emergency_Commiss...

I think we should be equally afraid of government and banks. That's why allowing both would be better for everyone.

Every government should have a tool to check if a transaction is illegal or not. In normal countries this should be done via a judge order if there are serious suspicions. This is how governments suppose to work. And there are checks and balances against power abuse, which were invented centuries ago. If a government doesn't work like that - then this is a problem of this specific government, not the laws. "All governments are bad" is a stupid idea, intentionally put onto the masses by the current US ruling party and their enablers (Musk), who are trying to seize all the power for themselves.

Those dozen banks cover about 99.99% of people who have a UK bank account, so in practice, sending money to other people in the UK is free and instant.

45 banks and payment providers are in the system: https://www.wearepay.uk/participants-list/

Most, if not all, of the rest (such as smaller building societies) will take part indirectly through an account with one of the participants.

The devil in the details. Pix allows you to give your account nb, but also email or phone to locate. Vendors can produce a QR code which embeds the destinator as well as the amount to be paid. Pix feels quicker than IBAN to IBAN. Very importantly, Pix is available even without a bank account. Opening a bank account is quite challenging and expensive for non-residents, among others.

As a Brazillian living in Europe, they're similar in concept but there are huge differences in the implementation. If I remember correctly IBAN-to-IBAN can take up to 2 days to process, Pix has a p99 of 10 seconds if I remember correctly (I worked in the implementation of Pix in one of the major digital banks in Brazil).

This is huge because it allows for all kind of use cases that it is not really possible with IBAN. For example, I just bought 3Dmark to test my new PC in Epic Games store using Pix, and my transaction was authorized almost as fast as if I had used a credit card. People in Brazil use Pix in day-to-day transactions like you would do with physical cash, so Pix also reduces the friction if you just want to start a side hustle (e.g., instead of accepting just cash or going through the trouble of getting a payment terminal, you can accept either cash or Pix and almost everyone is happy).

In Europe at least Switzerland instant IBAN to IBAN costs money. This is because they want to protect the similar payment service called TWINT which charges a high percentage to vendors and is owned by a group of banks. The conflict of interest is a huge issue.

These middle men are not needed and their fees especially not. If I taxes pay for the SNB which is supposed to guarantee that payments can be made then they should also do that for digital transactions, not only cash.

Also almost identical to Indian UPI.

A hybrid (as is happening today) is very feasible, that is, banks are subject to state laws, regulations and certifications. In turn, the state, through a central bank, offers them and their customers guarantees and warranties.

If my bank goes under, €100K of my money is insured by the central bank for example.

I wouldn't be too sure about that.

The digital euro could be a huge thing: 1. It would free the eu economy from the hidden “credit card tax” that goes to us companies. 2. It would create a base to finally make the availability of digital payments mandatory.

Krugman had a long-standing opinion column. Always a pleasure to read, even though many capitalists don't like what he has to say.