*🛹 If the “How do you do, fellow kids” meme were a crypto…*

Creators like Satoshi Nakamoto and companies including __Circle__ have launched cryptocurrencies. Now central banks want in on the fun with a digital currency they can issue and control (aka: a “__central bank digital currency__,” or CBDC). India's central bank plans to start its [CBDC](https://www.coindesk.com/policy/2022/10/31/indias-central-bank-to-start-wholesale-cbdc-pilot-nov-1/) pilot today, and the US Fed is “exploring” CBDCs.

DEFI(NE)

Heard on the Block: “CBDC”

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__Chuck your checkbook…__ Rent payments are entering the 21st century. Yesterday __[JPMorgan Chase](https://robinhood.com/stocks/JPM/)__ [said](https://www.cnbc.com/2022/10/31/jpmorgan-chase-unveils-payments-platform-for-landlords-and-tenants.html) it's testing a digital platform called “Story” to automate rent payments, which are still often paid by check. Here’s how it’s supposed to work: 

- __Renter center:__ Story will let renters enroll in auto-pay programs, get notifications, and view their payment history online. 
- __Owner dashboard:__ Story will allow landlords to view payments across their properties, use analytics to set prices, and screen prospective tenants.

__Rent tech is stuck in the dark ages…__ Today, 78% of US renters pay their rent by check — a paper technology that’s been used since the 1400s. One reason: most of America’s 12M landlords have relatively few units and collect payment just once a month, so they haven’t needed fancy systems. Now startups and banks are pushing for techier tools:

- __Rent rewards:__ __Bilt Rewards__, which offers a credit card in partnership with __[Mastercard](https://robinhood.com/stocks/MA/)__ and __[Wells Fargo](https://robinhood.com/stocks/WFC/)__, lets users earn rewards points by paying rent on time and then use those points to pay for travel, __[Amazon](https://robinhood.com/stocks/AMZN/)__ purchases, or even homes. 
- __Big bucks:__ This month Bilt raised $150M at a $1.5B valuation, and rent-tech startups __Esusu__, __Stake__, and __Piñata__ have also raised millions for rent-rewards programs.

Tap to pay rent? (Drew Angerer/Getty Images)

Checked

__Banks are betting big on boring…__ Banking big shots like JPMorgan and __[Goldman Sachs](https://robinhood.com/stocks/GS/)__ are investing in more consistent revenue streams like specialty consumer loans and co-branded cards to offset volatility in their investment-banking and trading divisions — and rental payments are as consistent as it gets (though less exciting than IPOs). JPM is already the biggest lender to US landlords; now it aims to snag a chunk of the $500B/year that Americans spend on rent.

Chase launches a techy rent-payment platform to boost reliable revenue (minus the checks)

__Venmo requesting JPowell…__ Everyday folks are struggling with higher interest rates, from mortgages to hefty credit-card payments. But Jack and Jill aren’t the only ones: central banks are [suffering](https://www.wsj.com/articles/higher-interest-rates-fuel-losses-at-the-federal-reserve-11667208602?mod=pls_whats_news_us_business_f) from their own medicine. 

- __The Fed’s losing money —__ something it’s never consistently done before. That’s partly because it now has to pay *higher* interest to banks for depositing money at the Fed (think: reserves and overnight loans). 
- __Losses are piling up:__ The Fed’s interest payouts now exceed the $8T+ that it earns on Treasury bonds and other securities. FYI: in recent years, it earned about $100B in *profit*, which is sent to the Treasury to reduce federal deficits. 
- __Not just the US:__ Central banks worldwide are dealing with the fallout of their inflation-fighting rate hikes, which don’t seem likely to slow anytime soon. Eurozone inflation just [hit](https://www.cnbc.com/2022/10/31/euro-zone-inflation-hits-10point7percent-in-october-.html) a record 10.7%. 

__The name’s bond…__ Higher interest payments on bank deposits aren’t the only problem. The bond market is experiencing its worst selloff in a generation. As rates rise, the value of existing bonds falls. People are selling old bonds as new ones are issued at higher rates. 

- __That’s bad for the Fed and other central banks__ that racked up huge bond portfolios to help stimulate their pandemic economies (bond-buying = more cash in circulation). 
- __As bond prices plunge,__ banks are watching the value of those holding plummet. The central banks of Australia, Switzerland, and the Netherlands are already [seeing red](https://www.bloomberg.com/news/articles/2022-10-25/fed-is-losing-billions-wiping-out-profits-that-funded-spending). Global government-bond losses are on track for the worst year since 1949.

__Pressure might not “break” the bank…__ but enough political backlash might make it adjust course. While losses don’t hamper central banks’ ability to conduct monetary policy (aka: do their job), they’re drawing concern from politicians. Without income from the Fed, the Treasury needs to borrow more to fund government spending. Now, calls are growing to slash the interest payments that central banks make to commercial banks.

Central banks are losing money as interest rates roar, swallowing their own bitter pill

Heard on the Block: “CBDC”

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