Topic: Could the digital Euro, Dollar or Yuan bank the unbanked? (Read 174 times)

If it involves electronic devices, I am pretty sure that we aren't going to be able to bank the unbanked because poor people don't have the luxury like us privileged people to have a mobile devices which we took for granted so we thought that maybe if we can do it then probably everyone can do it too. Bitcoin didn't bank the unbanked completely, what would it look like do you think on this copycats?

Strictly talking about the EU area here.
You don't have to be employed to have a bank account, and the numbers of people unbanked is going down if we look at the EU but only the Eurozone, so excluding  Romania or Bulgaria the number is closing on the 90% for adults with Finland and Belgium close to 100% already, alongside Denmark (not eurozone member)

So, a digital EURO wouldn't change much in terms of banking and access to banks, plus having a banking account would still be a necessity even with CBDC.
Second, a digital currency alone will not make you eligible for a credit card, you would still need a job and disposable income for it.

Would a digital euro change something in the Eurozone on those aspects? Probably not. If we speak about the whole EU-27 or we expand it to Europe then things are getting too murky to even approximate, it would depend on the decisions of each country and their won legislation and infrastructure so probably too early to even try and figure it out since we don't know too much about how a digital euro will even be created, and if it will ever be...


I can tell you something about the village where my grandparents live.
Internet and TV, water, gas, and electricity, roads in quite good quality, almost all except the really old, for example even my aunt who is in the late 70, are using a smartphone but when it comes to money they only deal in cash! Everyone is paying their bills at a small store using bills, everyone knows how to operate that ATM to pay for everything but nobody is touching even debit cards, not credit cards. I once tried to pay there with a card there and the cashier realized after 2 minutes that the PoS wasn't even connected as nobody used it then he reset everything, he scanned the products again, nothing worked....so I ended up paying in cash!  
Of course, it's not the same for poorer countries but at least in the EU is not the lack of the infrastructure that is holding things down but the distrusts of the people.

For developing countries, a digital currency will not be a magical pill either.
It doesn't matter if you can suddenly do cheap transactions and send money instantly with a tap if you don't have a job to earn money in the first place or you earn just to barely survive.

one country like Venezuela is of particular concern to us, despite some information to suggest that there is currently an increase from the tax increase to around $ 2.5. the position of digital money should be used as a reference for the future even for the country of Venezuela or Taiwan.
with Bitcoin as a pilot form for the adoption of digital money using the blockchain system. the government and banks are still the main obstacles to legal regulation of digital money. while the Yuan, Euro and also the Dollar above are trying to provide a solution. Is it possible for Venezuela to be able to make government policies to continue to include loans from Yuan or Dollar?

I cannot understand the logic behind these statements, people are living in a remote village that does not have any banking facilities but you expect them to have Internet connection and other modern gadgets, or the poor and the unbanked are there because they cannot go to a bank and create a savings bank account but they have the knowledge of using a gadget or a mobile phone and all the technology available  .

If you are looking for a credit it is mandatory that you need to have a savings bank account to pledge or you need to give a collateral to get that credit, if you are talking about the poor and the unbanked getting that opportunity, who is going to provide the capital for infrastructure. What i am trying to tell is that the poor always care about basic needs like food good drinking water and shelter and they do not care about getting a bank account either digitally or other ways.

Since you touched the topic of micro credit in India, do you have any idea about the interest percentage they charge for small amounts, it is insanely large and that too for small period of time and if you miss the compound interest will pile up and end up in a huge debt.

There were many suicide case in India regarding this and so is the reason the authorities started taking action against these micro lenders last year and found out that they were functioning without the RBI permission and many of the arrested company owners were Benami partners and they were run by Chinese citizens.

I think it probably will help a bit more. Not all unbanked are unbanked because of technology, even if you are severely poor and do not have any money at all, you can still start a bank account in anywhere near you. However there are very poverty ridden places in the world where people do not even have a need to start a bank. In my nation there are places where no civilization even goes because there is no need, they do not see the point of it.

So at the end of the day, what would happen if those people had digital euro? I mean they do not even have a regular banks so I do not see a digital fiat to be helpful to them, neither bitcoin for that matter neither for most unbanked. I am almost certain that most people who has ever been part of bitcoin also had a bank account as well, obviously not all but a huge majority of us did had a bank account.

I think right now the limitations are more than the goal to bank the unbanked, when you observe closely, 99% of the unbanked are located mostly in developing countries with very limited to no access to modern infrastructure, people in this remote areas can not access this infrastructure niether can they benefit from the digital way of doing transaction, in other to be able to do this, they will need access to internet, good device and most of all the knowledge to operate,

even though this may appear as an easy way to bank the unbanked, there are draw back still.

I hope you're right.  Maybe I'm just being cynical.  Nothing ever seems to break the cycle where money = power and what you're describing would very much shift the emphasis away from the power of commercial banks.  The point was continuously reinforced that commercial banks are an essential pillar of the economy, which fully justified all the bailouts/bailins so I can't see how their influence could be so suddenly diminished with the advent of CBDCs.

Traditional banking system is full of bureaucracy, procedures and limitation that in most cases contribute to keeping millions of people out of banking entirely. However crypto on the other hand does not involve many of these bureaucratic procedures, thus making it seamless to onboard anyone. I believe the digital Euro, Dollar or Yuan can in a great way bank the unbanked.

A vast majority of the "unbanked" people don't use bank services simply because they are poor.
They don't have money to deposit in a bank account.They don't have a stable 9/5 job or a collateral,in order to get a bank loan.Not having a PC and internet connection is another big obstacle.Poverty is the main reason why the people are "unbanked".
CBDCs cannot solve their problem,because CBDCs can't help them escape poverty.
Unfortunately the crypto industry cannot help those people,because it doesn't create enough jobs for people with low qualifications.

This sounds very promising, I am just not sure who is going to give credit to people who are not going to get credit at the moment. The credit companies with their ratings might make mistakes in some cases, but on average these credit scores are an important tool for banks who is eligible for a loan and who isn't. If there are no assets that could be used as collateral for the loan it becomes very difficult. If that money is digital or traditional fiat currency, the lender is always trying to protect their investments.

     I agree to the thought of people being more capable in money management or at least in a digital sense that isn't only about cryptocurrencies alone. But the problem about this is that being knowledgeable about digital assets and ways to keep them are quite difficult specially for the less fortunate ones who cannot access the internet or devices that are capable of doing so. Another problem is that to be able to actually avail of these modern money management services as mentioned, you need to actually have the money to manage and use. And that is the problem with the idea. We can only proceed with this idea if we can deliver knowledge to the less fortunate and traditional people and alleviate money problems that are caused by unemploymen. If this gets done step by step I bekieve that the economy of any country can and will really flourish.

Why? I know what I heard and they were talking clearly about not needing banks as intermediaries. They also talked about creating coins with an expiration date, to stimulate consumption. According to you, can't they create digital currencies with expiration dates?

As much as it pains me to say it, any CBDC will do far better than Bitcoin (or any other crypto, for that matter, unless it finds a way to run on mesh technology) in this "banking the unbanked" business.

Never mind CBDCs, I've seen how fintech working with banks in East Africa banked millions of people using cheap $10 phones (talking about personal experience seeing street stalls selling things for fractions of a cent using m-pesa. It was incredible 7 years ago, it's still incredible now.

First of all, who are going to be in control of the digital coins that you’re talking about? It’s still the same central banks and the member banks. So it’s still going to be the same thing as having a normal bank account, except maybe this time around if you want to make use of the digital coins you’re not going to be required to make deposit first while creating the account, and it will be made easier as you will be able to open an account by making use of your smartphone and you wouldn’t be required to go to the bank, you will just do it from the comfort of your home, but you’re still going to need all those documents that you submit to the bank when opening an account, like passport and ID. So there isn’t much difference.

If people accepts bitcoins or any decentralized cryptocurrencies for payments then central banks won't exists any longer because they are alive by printing money and liquidating them into their economy. And also how a bank is going to recognize that the received cryptos as their income?

Sorry if I don't get your idea!

No, I don't think so, these CBDC are made  to aid the economy and track where the people are using their money for transactions. Not mention that not everyone can use CBDC because not everyone has mobile devices in them.

The primary reason why certain people are unbanked is poverty. And I am not only talking about poverty in its literal sense, although it is one of them. After all, you don't save money in the banks if you cannot even manage to bring food on the table 3 times a day. CBDCs cannot address this.

Furthermore, there are so many places in many countries where banks could only be accessed after hours and hours of travel and such is one of the reasons why the people are unbanked. Many of such geographically isolated places are also beyond the reach of electricity and other technologies. Again, this cannot be addressed by CBDCs.

We can go on and on and on. The point is that CBDCs can only bank those unbanked who could have accessed the services of the banks even without turning the old fiat into its digital form. Those unbanked because the banks do not want them would remain unbanked.

People don't become ubanked because banks refuse to serve  them, they choose to be unbanked because they deal with cash only, for example if they are unofficially employed, so if they receive cash for their work, and don't get enough money to need to put it in a bank, there's no reason for them to open a bank account.

Unless CBDCs will come together with elimination of cash, the unbanked people would still exist and not use digital currencies.

I think that it may be quite different actually. Commercial banks are there to make profit and they will avoid anyone that looks more of a problem than a profitable customer. However central banks may have political objectives in mind that could potentially help the unbanked since they do not intend to make a profit, or at least a profit in the way we may understand when thinking of a traditional bank.

There may be some gate-keeping, but it may not be like the ones we currently know. For example, there were no micro-credits until someone decided to start giving them - eg. in India - and they worked wonderfully.

This will take time, it can even take centuries because there are many people that can not access browsing devices, some people are only using the phones because they are not having browsing phone, they only make use of phone to call, it will surprise you that some people are not even having phone at all. This will make fiat to still exist even in paper form because it is still very important in the society. In addition, many people are not literate or not literate enough to use cryptocurrencies, and this can take centuries before everyone in the world can blend to use cryptocurrencies. I still only see CBDCs as alternatives not replacement.

The only difference on CBDCs and today's fiat is the medium through which they are generated. Those who manages them will still be the same people that require you to submit a lot of unnecessary documents before being "considered" to have a bank account done on your name. If anything, the requirements will even be unnecessarily tougher, with the reasoning that everything exists digitally so why would it be hard for one to get those? It will not bridge the gap on the bank and the unbanked statistics, and instead will be widening it should we ever come to a time when CBDCs are already enforced and is a reality to us.

We cant really deny that not all does have the access nor able to benefit out when it comes to those banking services due to lack of capacity or capability when it comes to finance sector and its true
that ones these digital coins would commence out then that would surely be a relevant move.

Comparing about Initiatives between these digital coins compared to bitcoin is somewhat really be different because when it comes to exposure or marketing then nothing beats out when government
do really introduce things up.

People who had been used to traditional things will easily believe on and would just simply stick on it.

I think even worse than that some areas and set of people don't even have access to Technology & Computers too so even if Banks create digital currency they still won't be able to take any advantage of it, but let's keep that apart, talking about the possibility of it how exactly will digital coins help in banking the unbanked? Infact I think it's easier to operate a bank account than to operate a digital wallet isn't it? Moreover, if the government isn't able to bank the unbanked with a normal currency, something like a CDBC would be a lot more difficult task for them to handle. I don't really understand your idea?

It seems to me that you did not fully understand this news. The central bank cannot send digital currency to people and to do it without the involvement of other banks. If we are talking about the stable coins of the central banks of states (CBDC), then the banks will all the same participate here.
CBDCs will partially displace fiat currencies from circulation, but they will not completely replace them. The need for paper money will all the same exist both on the part of states and on the part of certain groups of people.

Once the gatekeepers have granted you access.  And given that they'll be the same gatekeepers who are currently keeping people unbanked in the current legacy financial system, I honestly don't expect CDBCs to be any different in that regard.  The floodgates are not going to rush open (IMHO).  They'll probably still want your multiple forms of ID, your proof of address, all the security checks they ask for now.  Wouldn't surprise me if they added some new checks as well.  Don't have some of those things they insist on having to prove your identity and satisfy their government-mandated checklist?  Too bad.  No entry for you. 

The people pushing for these CBDCs can give lip service by listing any number of potential advantages, but will be suddenly silent when none of those advantages materialise in execution.  They don't know how to change for the better.  It's an alien concept to them.

In my Country Nigeria, I was surprised really when I saw that we are ranked 2nd in the crypto market. I wasn't really expecting that because some people like you said in my country don't have a bank account, I asked my office cleaner once if she has and she said no and with the rate at which people are really into this I was amazed.

I heard on the radio the other day that those digital curencies will eliminate the need for banks. With them, the Central Banks can give aid directly to certain sectors of the population or to individuals who request it and meet certain requirements. When the Central Bank decides to give the aid, it will simply transfer the digital currency to that person's wallet and will not need an intermediary bank.

It remains to be seen whether this will be the case, as I do not see central banks doing away with traditional banking just like that.

What I have noticed in my country which is among the ones you mentioned is that most people that are not using bank are not also using a type of phone that can browse, they use a very cheap phones that they can just use for calls, if they can not use good phone, definitely they are also not having laptop. I believe CBDCs will be accessed through browsing phones or computers or maybe also stored on hardware wallets.

The present cryptocurrencies which are decentralized are enough for this, but yet such people do not know what cryptocurrencies are, that is just the problem, I do not think CBDCs can add anything to this for now as some people are not literates. It is people that are still using decentralized currencies that might be able to use CBDCs also. But these centralized cryptocurrencies may not let privacy to exist at all for users that are using the centralized cryptocurrencies.

May time we forget that there are millions of people out there that do not have access to any type of banking. I am speaking of millions that do not geenrate a recurrent income, do not have access to credit and have their lives quite limited for that fact.

One of the possible advantages of having digital currencies that are recognised by strong central banks and can be moved digitally is the possible access of all this people to a system of storage, exchange and maybe even credit through the digital official coins. I can only begin to imagine how huge can be the economy enabled by these initiatives if bitcoin alone has already taken a preeminent place in a few countries such as Nigeria, Myanmar, Venezuela, ...