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%).
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.
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.
Well, I think crypto does solve a couple important problems faced by many speculative markets and casinos: Regulation and taxation. It's any scammer, grifter, and thief's paradise!
> 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:
> Republicans say that they’re worried about invasion of privacy, that a CBDC would open the door to widespread government surveillance. But remember, these are the people who have handed over personal Medicaid data to ICE to facilitate arrests and abductions
Instead of providing an argument for why CBDC is not invading privacy and enables government surveillance he goes for ad-hominem of "they're bad and don't care about what they say they care about".
I don't need Republicans to care about privacy. CBDC would be a privacy and surveillance nightmare and if Republicans ban it, it's a good thing regardless of their motivations or thoughts.
Imagine a giant bank, potentially mandatory for citizens, run by government.
Today if government wants to look at your bank account and transactions they have to convince the judge to sign a warrant.
With CBDC they'll just have this information, they'll control your ability to send money which is essential to modern living.
We'll inevitably be one supermajority away from your ability to use money will vanish because you say something government doesn't like or call a politician fat.
This is not future dystopia, this is today dystopia.
In Canada during Covid protest the government gave itself emergency powers and shut down bank accounts of protesters.
In Brazil the new government just made it criminal to do and share interviews with previous president.
In Germany they're prosecuting someone for calling politician fat.
Governments will abuse any power they get so it's best to give them as little power as possible.
Politicians love it because they love every tool of control.
I don't know why Krugman loves it but you should be against it.
Sending money is not a problem and it doesn't need government to provide a "solution".
Mandatory comment pointing out the "Nobel" in Economics is not a real Nobel Prize. It was made up by the central banking cartel to reward economists who say the things they like. From MMT to ideology stuff.
> established in 1968 by Sveriges Riksbank (Sweden's central bank)
> Some critics argue that the prestige of the Prize in Economic Sciences derives in part from its association with the Nobel Prizes, an association that has often been a source of controversy. Among them is the Swedish human rights lawyer Peter Nobel, a great-grandnephew of Alfred Nobel.
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.
> 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:
Reminded me of UK Faster Payments which I use frequently to send money around at zero cost and typically reaches destination in a minute at zero cost to either side. Only works with a dozen or so banks in the UK.
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.
In Brazil, you can send money to individuals, businesses, government entities... essentially anyone with a bank account, and for free. And the transaction doesn’t take minutes, it takes seconds.
Right, but only to a bank account with bank account details. You can't send money to a phone number, QR code (temporary or persistent), CPF, email address, etc.
Pix isn't really comparable to SEPA Instant or Faster Payments, and the adoption rate shows it.
Seems to me that this a story mostly about the very long settlement process that is specific to US, and less to the rest of the civilized world.
Regarding the use of a digital currency, what Pix is missing, and what a cryptocurrency has, is the decentralization mechanism. All the ops are still controlled by a centralized entity, in this case the Brazilian Central Bank. Am I missing something?
I don't get how a payment system - Pix or any other of the many similar others in the large world - is the future of money? For sure it's the future of payment systems, but what it is transacting is still plain old money, just in a faster way.
I also don't see the advantages of a central bank stablecoin, wouldn't it be exactly the same as the actual currency? When I pay with Pix/Twint/BTPay I'm not handling printed notes either, so behind the scenes it could transact anything for all what I care - dollars, stablecoins, gold, potatoes...
I had to look it up, and of course there's a Potato coin.
About Potato
Potato is a Revolutionary Meme token built on the Solana Network. Potato coin a dex build on solana, all fees go towards buying back and burning potatos
Pix has become virtually liquid cash here in Brazil. We use it for everything from tipping a waiter to buying an apartment or house in seconds.
Before the release, when I read about the system, I was skeptical, but after its release (approximately 5 years ago), it has worked seamlessly, and adoption is now nearly 100% across the economy.
This is funny. Most of the "positive" attributes of the Brasilian Pix that are praised in the article are the same as for IBAN-to-IBAN ("wire") transfers in Europe.
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.
this may be a big angle, esp. for lots of poor people (which is a thing in brazil), as it gets them secure transfers.
getting cash remits from the gov was/is a huge challenge in india, for example. lots of people qualify but don't have a bank account or card or other basics.
Netherlands has implemented Tikkie on top of iDEAL, which is essentially the same outcome. You link your bank account, send a payment request URL or put up a QR if you're a business. That's good UX, and it's getting better adoption.
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).
Is this transaction time down to the two banks using different systems? I do vaguely recall that banks exchange a day's worth of transactions in nightly batches. Whereas a centralized system means everyone uses the same.
I wouldn't object to standardized banking software in that case.
Iirc, it is now legally mandated to perform instant transfers but some banks are slow to implement this feature. I have an account in one of German neobanks, where it’s basically 4 steps: Face ID, click transfer, paste IBAN and enter the name, enter amount, and the recipient gets push notification from their bank within a few seconds.
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.
According to the regulations, https://www.ecb.europa.eu/paym/integration/retail/instant_pa... , equality of charges must be implemented before 9 January 2025 for member states and before 9 January 2027 for non-member states. And SEPA is a euro only. So conversion fees will apply for Switzerland.
There is also another thing in the works based on SEPA instant payments - Wero ( https://wero-wallet.eu/ ) but it will take some time to implement all functionality and roll it out.
> I can’t help noticing that Pix is actually achieving what cryptocurrency boosters claimed, falsely, to be able to deliver through the blockchain — low transaction costs and financial inclusion. Compare the 93 percent of Brazilians using Pix to the 2 percent, that’s right, 2 percent of Americans who used cryptocurrency to buy something or make a payment in 2024.
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.
Institutional faith in Pix has been rocked recently, as earlier this month, hackers using credentials purchased from a C&M employee were able to generate unauthorised PIX transactions on client banks and steal at least BRL$ 500 MM and maybe as much as BRL $ 5 BN.
Although funds are already being recovered, it has highlighted the opacity of Pix security, which has flown somewhat under the radar due to the closed nature of the system.
Yes, a developer for an upstream dependency sold their credentials and the attackers were able to use that to create transactions in client banks' Pix infrastructure.
> Not much opacity here.
I think a black box implemented by a third party that can steal your funds is the definition of opacity.
> They shoud stop relying on poorly paid outside contractors.
A great deal of financial software is written by poorly paid contractors, but it's rare that one set of credentials can introduce systematic risk to a financial system.
There are considerable privacy concerns regarding pix, some Brazilian government officials are able to obtain transaction information without a court order, which is needed when it comes to traditional methods that came before pix.
Yes, as commented elsewhere Brazilians in general are very accepting of government surveillance, with the omnipresent CPF and now complete disclosure of almost all consumer transactions to the State. It's always surprised me, TBH, given the very recent history of dictatorship and unbounded potential for abuse.
This attack was not against the Pix system itself but the systems provided by C&M, and was attributed to an employee infiltrating said system. While the attack used the Pix service to move funds, Pix worked as expected. There is nothing it can do with incoming valid but fraudulent transactions.
> While the attack used the Pix service to move funds, Pix worked as expected.
That is not the case, as it appears the attackers were able to use the Pix protocol to transfer funds from accounts not controlled by the attackers.
> There is nothing it can do with incoming valid but fraudulent transactions.
Well, we don't yet know the actual mechanism, but that is the opacity we're talking about.
It's certainly not impossible to ameliorate insider risk and it's definitely not a given that a single set of compromised developer credentials should be able to enact widespread fraudulent transactions across many banks.
If I understand it correctly, Pix is the same as digital euro [1].
No common bank account needed, just move digital money from one to another wallet from the federal bank.
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.
If you think about it, it makes you independent of any bank. You simply don't need them anymore. Additionally, you can use the wallet from the federal or central bank to verify your age when making purchases.
The downside might be—depending on how they implement it, but currently it's not looking good—that the wallet is no longer anonymous. This is a huge issue, in my opinion.
GNU Taler [1] for example, might be a Software implementation that can be used for anonymous transaction with digital money (without blockchain).
It naive to think that that digital currencies would somehow be free of fees, hidden or otherwise. Remember when streaming services were great because they offered an ad-free experience. Digital currencies will eventually have fees, and lots of them because they can be built-in and because people won't be given a choice. It will be a worse state than current credit cards.
POS will likely always cost something or be slightly annoying like having to use some stupid possibly unsecure app(I will never trust them, whatever you tell me). On other hand for consumer cards the fees are already in sub 1% range. Which to me sounds acceptable.
The first line is straight out of the Hitchhikers Guide to the Galaxy in the same vein as "In the beginning the universe was created. This made a lot of people angry and has widely been considered as a bad move." Love it!
Central bank digital currencies are an odd idea that lots of people have talked about but not implemented as they don't really make a lot of sense. It started because things like bitcoin and tether got a lot of traction as mostly unregulated cryptocurrencies and governments thought why have these criminimal using tether - we can issue a government crypto instead. But it doesn't really make sense - if you are going to use something regulated by the government why not just put your money in a bank account and drop the blockchain stuff?
There's a huge error in the article. It says Pix doesn't lead to kidnapping and torture. It absolutely does.
Kidnapping people then forcing them to unlock their phones to make a Pix to the kidnapper is such a huge problem here in Brazil that banks have instituted layers upon layers of safety measures, such as reduced nightly transfer limits, different limits on whether you're sending money to someone you know vs someone you never sent money before vs businesses etc. So if a criminal sees you have a lot of money they keep you kidnapped for days until you transfer everything a piece a day. And their colleagues then withdraw the values or transfer them through several accounts, making it impossible to recover.
Part of that also involves forcing the kidnapped person to make all the loans their banks provide them, conveniently easy to do in the same app you use to make a Pix, and then send them the money.
Due to that we also have insurance specifically covering forced Pix transfers, but with limits above which the bank isn't responsible.
Some people defend themselves via alternative means. I myself, for example, keep a cheap phone exclusively for bank transactions at home, never installing the app on my main phone I carry with me. Which I also keep rooted, as that prevents baking apps from being installed (they refuse to run).
Oh! And there's fraud to in the form of replacing the fraudster's QR code for a business's, without the business noticing, so payments go to the wrong account.
And recently the government has started threatening big businesses that fail obeying arbitrary pressure due to this or the political reason with suspension from the Pix system, which due to how much it's used would severely cripple them as they'd lost tons of customers who have neither debit nor credits cards, so those businesses end up obeying. So there's that too.
TL;DR: Pix doesn't really solve those safety aspects the author talks about. But other than that, yes, it's extremely convenient and functional.
Kugman seems to be holding himself to a fairly low standard in this article for explaining himself - I can't figure out what he is trying to articulate unless he is trying to write an ironic headline. A key observation with blockchains is that the only thing they bring is the trust model. Otherwise, all their capabilities can be captured more efficiently with a database and a trusted central server.
Brazil seems to have introduced a system with low transaction fees that Krugman likes. Ok. If it has no trusted central authority then it is something that you can just bring over to the US, today, and use and an exciting future may be incoming. The Fed getting involved and researching CBDCs wouldn't do very much. But he seems to be selling the central role of the Brazilian government is playing here so I don't think that is what is happening.
If it has a centrally trusted institution then we've gone 50 or so years without discovering whatever this innovation is it which seems like it'd be bigger news than a blog post. The whole story here seems to be that Brazil has implemented something with marginally improved transaction costs in their financial system. That doesn't sound like a "future" to me; it sounds like the same technologies we've all known about for decades being used in ways we've known about for just as long. Whats the news in terms of novelty? Is he just saying he likes how Brazil manages their money? Why are CBDCs involved in this?
> Republicans say that they’re worried about invasion of privacy, that a CBDC would open the door to widespread government surveillance. But remember, these are the people who have handed over personal Medicaid data to ICE to facilitate arrests and abductions. If you think they’re deeply concerned about potential surveillance, I have some Trump family memecoins you might want to buy.
I know it seems like he's insulting Republicans here, but it's clear Krugman thinks so little of his readers.
the argument then goes to the fallacies of fiat currency, or the implications of the fact that said paper may soon have pictures of a live president on it
Hello..? SEPA? IBAN-to-IBAN? iDEAL and many other integrated payment systems in Europe allowing instant C2B/B2C/B2B payments?
We do not need crypto, the technology is here and implemented, and bank transfer fees are archaic rent-seeking structures.
Well done Brazil, wake up America.
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%).
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.
then we continue to use physical cash. a $10 bill still works when the power goes out
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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.
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.
Well, I think crypto does solve a couple important problems faced by many speculative markets and casinos: Regulation and taxation. It's any scammer, grifter, and thief's paradise!
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I thought it was supposed to solve the problem of being kicked out of the banking system if you offend the wrong people?
> 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.
How is that different from SEPA?
All my bank transfers are done via SEPA, including those that I do for my business.
Frankly, I could not care less. I just type in or select an IBAN or scan the QR code with IBAN+Name+Comment+Amount+Currency
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In South Africa we've had free, instant, interbank payments for more than a decade now.
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:
> Republicans say that they’re worried about invasion of privacy, that a CBDC would open the door to widespread government surveillance. But remember, these are the people who have handed over personal Medicaid data to ICE to facilitate arrests and abductions
Instead of providing an argument for why CBDC is not invading privacy and enables government surveillance he goes for ad-hominem of "they're bad and don't care about what they say they care about".
I don't need Republicans to care about privacy. CBDC would be a privacy and surveillance nightmare and if Republicans ban it, it's a good thing regardless of their motivations or thoughts.
Imagine a giant bank, potentially mandatory for citizens, run by government.
Today if government wants to look at your bank account and transactions they have to convince the judge to sign a warrant.
With CBDC they'll just have this information, they'll control your ability to send money which is essential to modern living.
We'll inevitably be one supermajority away from your ability to use money will vanish because you say something government doesn't like or call a politician fat.
This is not future dystopia, this is today dystopia.
In Canada during Covid protest the government gave itself emergency powers and shut down bank accounts of protesters.
In Brazil the new government just made it criminal to do and share interviews with previous president.
In Germany they're prosecuting someone for calling politician fat.
Governments will abuse any power they get so it's best to give them as little power as possible.
Politicians love it because they love every tool of control.
I don't know why Krugman loves it but you should be against it.
Sending money is not a problem and it doesn't need government to provide a "solution".
> a Nobel prize winner
Mandatory comment pointing out the "Nobel" in Economics is not a real Nobel Prize. It was made up by the central banking cartel to reward economists who say the things they like. From MMT to ideology stuff.
https://en.wikipedia.org/wiki/Nobel_Memorial_Prize_in_Econom...
> established in 1968 by Sveriges Riksbank (Sweden's central bank)
> Some critics argue that the prestige of the Prize in Economic Sciences derives in part from its association with the Nobel Prizes, an association that has often been a source of controversy. Among them is the Swedish human rights lawyer Peter Nobel, a great-grandnephew of Alfred Nobel.
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.
I think we should be equally afraid of government and banks. That's why allowing both would be better for everyone.
> 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...
Reminded me of UK Faster Payments which I use frequently to send money around at zero cost and typically reaches destination in a minute at zero cost to either side. Only works with a dozen or so banks in the UK.
https://www.hsbc.co.uk/current-accounts/what-is-faster-payme...
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.
In Brazil, you can send money to individuals, businesses, government entities... essentially anyone with a bank account, and for free. And the transaction doesn’t take minutes, it takes seconds.
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Right, but only to a bank account with bank account details. You can't send money to a phone number, QR code (temporary or persistent), CPF, email address, etc.
Pix isn't really comparable to SEPA Instant or Faster Payments, and the adoption rate shows it.
> instant
is a very generous word to describe banking websites and apps!
Sending a payment to a new person with Santander is going to take at least 5 minutes and 3 round-trips through SMS 2FA.
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Australia too with PayID/Osko
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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.
Seems to me that this a story mostly about the very long settlement process that is specific to US, and less to the rest of the civilized world.
Regarding the use of a digital currency, what Pix is missing, and what a cryptocurrency has, is the decentralization mechanism. All the ops are still controlled by a centralized entity, in this case the Brazilian Central Bank. Am I missing something?
I don't get how a payment system - Pix or any other of the many similar others in the large world - is the future of money? For sure it's the future of payment systems, but what it is transacting is still plain old money, just in a faster way.
I also don't see the advantages of a central bank stablecoin, wouldn't it be exactly the same as the actual currency? When I pay with Pix/Twint/BTPay I'm not handling printed notes either, so behind the scenes it could transact anything for all what I care - dollars, stablecoins, gold, potatoes...
I had to look it up, and of course there's a Potato coin.
About Potato
Potato is a Revolutionary Meme token built on the Solana Network. Potato coin a dex build on solana, all fees go towards buying back and burning potatos
https://coinmarketcap.com/currencies/potato/
Related, there's also Potato Rounds, which are crispy, thin-sliced, and oven baked, with a sprinkle of sea salt.
https://recipeforperfection.com/olive-oil-and-sea-salt-oven-...
Pix has become virtually liquid cash here in Brazil. We use it for everything from tipping a waiter to buying an apartment or house in seconds.
Before the release, when I read about the system, I was skeptical, but after its release (approximately 5 years ago), it has worked seamlessly, and adoption is now nearly 100% across the economy.
This is funny. Most of the "positive" attributes of the Brasilian Pix that are praised in the article are the same as for IBAN-to-IBAN ("wire") transfers in Europe.
What does that have to do with any ---coins?
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.
> Pix is available even without a bank account
this may be a big angle, esp. for lots of poor people (which is a thing in brazil), as it gets them secure transfers.
getting cash remits from the gov was/is a huge challenge in india, for example. lots of people qualify but don't have a bank account or card or other basics.
Netherlands has implemented Tikkie on top of iDEAL, which is essentially the same outcome. You link your bank account, send a payment request URL or put up a QR if you're a business. That's good UX, and it's getting better adoption.
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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).
> IBAN-to-IBAN can take up to 2 days to process
It's getting there. Some of my transfers are instant now.
Apparently someone decided they'll fix the existing system instead of creating a whole new system with a fancy name.
However, your description of Pix still doesn't explain the ---coin fetish in the original article.
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Is this transaction time down to the two banks using different systems? I do vaguely recall that banks exchange a day's worth of transactions in nightly batches. Whereas a centralized system means everyone uses the same.
I wouldn't object to standardized banking software in that case.
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2 days is (almost) a thing of a past considering the implementation deadline for EU member states - https://www.ecb.europa.eu/paym/integration/retail/instant_pa...
„IBAN-to-IBAN can take up to 2 days to process“
Iirc, it is now legally mandated to perform instant transfers but some banks are slow to implement this feature. I have an account in one of German neobanks, where it’s basically 4 steps: Face ID, click transfer, paste IBAN and enter the name, enter amount, and the recipient gets push notification from their bank within a few seconds.
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.
Instant IBAN to IBAN in Switzerland doesn't inherently cost money, the cost is just a cash grab by the banks.
BEKB offers a free account with free instant transfers. Hypothekarbank Lenzburg offers free instant transfers on their standard paid account.
Outside of Switzerland, instant SEPA transfers are typically free.
According to the regulations, https://www.ecb.europa.eu/paym/integration/retail/instant_pa... , equality of charges must be implemented before 9 January 2025 for member states and before 9 January 2027 for non-member states. And SEPA is a euro only. So conversion fees will apply for Switzerland.
There is also another thing in the works based on SEPA instant payments - Wero ( https://wero-wallet.eu/ ) but it will take some time to implement all functionality and roll it out.
Also almost identical to Indian UPI.
> I can’t help noticing that Pix is actually achieving what cryptocurrency boosters claimed, falsely, to be able to deliver through the blockchain — low transaction costs and financial inclusion. Compare the 93 percent of Brazilians using Pix to the 2 percent, that’s right, 2 percent of Americans who used cryptocurrency to buy something or make a payment in 2024.
Tbh it's better that the state controls citizens' payment infrastructure than the private commercial banks.
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.
And if a Central Bank goes under, banking is the least of your concerns.
I wouldn't be too sure about that.
its a great idea as long as the state is benevolent. MAGA showed just how fast that can change...
Institutional faith in Pix has been rocked recently, as earlier this month, hackers using credentials purchased from a C&M employee were able to generate unauthorised PIX transactions on client banks and steal at least BRL$ 500 MM and maybe as much as BRL $ 5 BN.
Although funds are already being recovered, it has highlighted the opacity of Pix security, which has flown somewhat under the radar due to the closed nature of the system.
It was due to a contractor that sold his password for peanuts. Not much opacity here. They shoud stop relying on poorly paid outside contractors.
Yes, a developer for an upstream dependency sold their credentials and the attackers were able to use that to create transactions in client banks' Pix infrastructure.
> Not much opacity here.
I think a black box implemented by a third party that can steal your funds is the definition of opacity.
> They shoud stop relying on poorly paid outside contractors.
A great deal of financial software is written by poorly paid contractors, but it's rare that one set of credentials can introduce systematic risk to a financial system.
> They shoud stop relying on poorly paid outside contractors
Besides paying decent wages, they should get rid of single points of failure, being them silicon or meat based.
There are considerable privacy concerns regarding pix, some Brazilian government officials are able to obtain transaction information without a court order, which is needed when it comes to traditional methods that came before pix.
Yes, as commented elsewhere Brazilians in general are very accepting of government surveillance, with the omnipresent CPF and now complete disclosure of almost all consumer transactions to the State. It's always surprised me, TBH, given the very recent history of dictatorship and unbounded potential for abuse.
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Source?
This attack was not against the Pix system itself but the systems provided by C&M, and was attributed to an employee infiltrating said system. While the attack used the Pix service to move funds, Pix worked as expected. There is nothing it can do with incoming valid but fraudulent transactions.
> While the attack used the Pix service to move funds, Pix worked as expected.
That is not the case, as it appears the attackers were able to use the Pix protocol to transfer funds from accounts not controlled by the attackers.
> There is nothing it can do with incoming valid but fraudulent transactions.
Well, we don't yet know the actual mechanism, but that is the opacity we're talking about.
It's certainly not impossible to ameliorate insider risk and it's definitely not a given that a single set of compromised developer credentials should be able to enact widespread fraudulent transactions across many banks.
If I understand it correctly, Pix is the same as digital euro [1]. No common bank account needed, just move digital money from one to another wallet from the federal bank.
[1] https://www.ecb.europa.eu/euro/digital_euro/html/index.en.ht...
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.
If you think about it, it makes you independent of any bank. You simply don't need them anymore. Additionally, you can use the wallet from the federal or central bank to verify your age when making purchases.
The downside might be—depending on how they implement it, but currently it's not looking good—that the wallet is no longer anonymous. This is a huge issue, in my opinion.
GNU Taler [1] for example, might be a Software implementation that can be used for anonymous transaction with digital money (without blockchain).
[1] https://www.taler.net/en/index.html
It naive to think that that digital currencies would somehow be free of fees, hidden or otherwise. Remember when streaming services were great because they offered an ad-free experience. Digital currencies will eventually have fees, and lots of them because they can be built-in and because people won't be given a choice. It will be a worse state than current credit cards.
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POS will likely always cost something or be slightly annoying like having to use some stupid possibly unsecure app(I will never trust them, whatever you tell me). On other hand for consumer cards the fees are already in sub 1% range. Which to me sounds acceptable.
The first line is straight out of the Hitchhikers Guide to the Galaxy in the same vein as "In the beginning the universe was created. This made a lot of people angry and has widely been considered as a bad move." Love it!
Central bank digital currencies are an odd idea that lots of people have talked about but not implemented as they don't really make a lot of sense. It started because things like bitcoin and tether got a lot of traction as mostly unregulated cryptocurrencies and governments thought why have these criminimal using tether - we can issue a government crypto instead. But it doesn't really make sense - if you are going to use something regulated by the government why not just put your money in a bank account and drop the blockchain stuff?
Didn’t get much traction before, but worth looking into: https://news.ycombinator.com/item?id=44645694
i was randomly going through top posts, had no idea this is by a nobel laureate. hn amazes always
Krugman had a long-standing opinion column. Always a pleasure to read, even though many capitalists don't like what he has to say.
"We need more communism!"
- Standard well paid software engineer rails against the evils of capitalism
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There's a huge error in the article. It says Pix doesn't lead to kidnapping and torture. It absolutely does.
Kidnapping people then forcing them to unlock their phones to make a Pix to the kidnapper is such a huge problem here in Brazil that banks have instituted layers upon layers of safety measures, such as reduced nightly transfer limits, different limits on whether you're sending money to someone you know vs someone you never sent money before vs businesses etc. So if a criminal sees you have a lot of money they keep you kidnapped for days until you transfer everything a piece a day. And their colleagues then withdraw the values or transfer them through several accounts, making it impossible to recover.
Part of that also involves forcing the kidnapped person to make all the loans their banks provide them, conveniently easy to do in the same app you use to make a Pix, and then send them the money.
Due to that we also have insurance specifically covering forced Pix transfers, but with limits above which the bank isn't responsible.
Some people defend themselves via alternative means. I myself, for example, keep a cheap phone exclusively for bank transactions at home, never installing the app on my main phone I carry with me. Which I also keep rooted, as that prevents baking apps from being installed (they refuse to run).
Oh! And there's fraud to in the form of replacing the fraudster's QR code for a business's, without the business noticing, so payments go to the wrong account.
And recently the government has started threatening big businesses that fail obeying arbitrary pressure due to this or the political reason with suspension from the Pix system, which due to how much it's used would severely cripple them as they'd lost tons of customers who have neither debit nor credits cards, so those businesses end up obeying. So there's that too.
TL;DR: Pix doesn't really solve those safety aspects the author talks about. But other than that, yes, it's extremely convenient and functional.
Just looking down from Cambodia...
Krugman’s touting Brazil’s Pix as money’s future — government-run, instant, and actually useful— while taking his usual “script” on crypto flops.
Fair if you’re already in his camp on Bitcoin being BS, but just a quick recall his epic misses:
- dismissing the internet as a fax-machine bubble back in ‘98
- his endless rants against stablecoins that keep proving him wrong.
I get it, you like nobel laureate even if they aren’t very sharp.
Please read Limes Inferior written by Andrzej Zajdel to learn what are Republicans and other right-winged afraid of.
Very cool, reminds me of India's UPI system
Kugman seems to be holding himself to a fairly low standard in this article for explaining himself - I can't figure out what he is trying to articulate unless he is trying to write an ironic headline. A key observation with blockchains is that the only thing they bring is the trust model. Otherwise, all their capabilities can be captured more efficiently with a database and a trusted central server.
Brazil seems to have introduced a system with low transaction fees that Krugman likes. Ok. If it has no trusted central authority then it is something that you can just bring over to the US, today, and use and an exciting future may be incoming. The Fed getting involved and researching CBDCs wouldn't do very much. But he seems to be selling the central role of the Brazilian government is playing here so I don't think that is what is happening.
If it has a centrally trusted institution then we've gone 50 or so years without discovering whatever this innovation is it which seems like it'd be bigger news than a blog post. The whole story here seems to be that Brazil has implemented something with marginally improved transaction costs in their financial system. That doesn't sound like a "future" to me; it sounds like the same technologies we've all known about for decades being used in ways we've known about for just as long. Whats the news in terms of novelty? Is he just saying he likes how Brazil manages their money? Why are CBDCs involved in this?
> Republicans say that they’re worried about invasion of privacy, that a CBDC would open the door to widespread government surveillance. But remember, these are the people who have handed over personal Medicaid data to ICE to facilitate arrests and abductions. If you think they’re deeply concerned about potential surveillance, I have some Trump family memecoins you might want to buy.
I know it seems like he's insulting Republicans here, but it's clear Krugman thinks so little of his readers.
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If you value privacy, it is hard to see how someone can be against "green pieces of paper bearing pictures of dead presidents".
the argument then goes to the fallacies of fiat currency, or the implications of the fact that said paper may soon have pictures of a live president on it
> may soon have pictures of a live president on it
Hopefully not for long.
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That type of money can be printed at will causing devaluation.
Downvoted by people who don’t value privacy :)
Wake me up when you carry your phone in a Faraday cage. Also, stop participating in any social networks.
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