by Wolf Richter
Wolf Street
But the problemita of pulling the rug out from under the entire banking system still needs to be addressed.
“As cash use continues to decline, the question naturally arises as to whether central banks should provide a digital alternative to cash that also provides some privacy features,” says the blog post, titled “Monetizing Privacy,” by the New York Fed. The post is based on a 26-page academic paper on digital payment methods that have been used broadly, the current market structure of digital payment methods, the data-gathering that occurs, versus cash payments that preserve privacy – and versus the “digital dollar” now being worked on.
Each time a digital payment takes place, the companies involved gather voluminous amounts of data and hang on to it because it gives them a competitive advantage in selling more goods or services to this particular consumer. This data has a lot of value for these companies – a key point we’ll get to in a moment with regards to the “digital dollar.”