The Fed Is Contemplating Creating Their Own Digital Currency

g5000

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Nov 26, 2011
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CBDC = Cental Bank Digital Currency.

The Federal Reserve is exploring the implications of, and options for, issuing a CBDC. For the purpose of this paper, a CBDC is defined as a digital liability of the Federal Reserve that is widely available to the general public. While Americans have long held money predominantly in digital form—for example in bank accounts recorded as computer entries on commercial bank ledgers—a CBDC would differ from existing digital money available to the general public because a CBDC would be a liability of the Federal Reserve, not of a commercial bank.

[snip]

The Federal Reserve does not intend to proceed with issuance of a CBDC without clear support from the executive branch and from Congress, ideally in the form of a specific authorizing law.


The existing forms of money:

• Central bank money is a liability of the central bank. In the United States, central bank money comes in the form of physical currency issued by the Federal Reserve and digital balances held by commercial banks at the Federal Reserve.
• Commercial bank money is the digital form of money that is most commonly used by the public. Commercial bank money is held in accounts at commercial banks.
• Nonbank money is digital money held as balances at nonbank financial service providers. These firms typically conduct balance transfers on their own books using a range of technologies, including mobile apps


[snip]

Cryptocurrencies have not been widely adopted as a means of payment in the United States. They remain subject to extreme price volatility, are difficult to use without service providers, and have severe limitations on transaction throughput.13 Many cryptocurrencies also come with a significant energy footprint and make consumers vulnerable to loss, theft, and fraud.

Amen! Cryptocurrencies are nothing more than speculative vapor. They are as volatile as the price of natural gas.


Cash is currently the only central bank money that is available to the general public, and it remains an important and popular means of payment. According to a 2020 survey, U.S. consumers used cash for 19 percent of total transactions (6 percent by value).22 The Federal Reserve is committed to ensuring the continued safety and availability of cash and is considering a CBDC as a means to expand safe payment options, not to reduce or replace them. In some jurisdictions, however, digital payments have rapidly supplanted cash. While cash use in the United States fell from 40 percent of transactions in 2012 (12 percent by value) to 19 percent in 2020, other countries have seen more rapid declines.


Something which occurred to me while I was reading this paper:

A CBDC could fundamentally change the structure of the U.S. financial system, altering the roles and responsibilities of the private sector and the central bank.

Banks currently rely (in large part) on deposits to fund their loans. A widely available CBDC would serve as a close—or, in the case of an interest-bearing CBDC, near-perfect—substitute for commercial bank money. This substitution effect could reduce the aggregate amount of deposits in the banking system, which could in turn increase bank funding expenses, and reduce credit availability or raise credit costs for households and businesses.27 Similarly, an interest-bearing CBDC could result in a shift away from other low-risk assets, such as shares in money market mutual funds, Treasury bills, and other short-term instruments. A shift away from these other low-risk assets could reduce credit availability or raise credit costs for businesses and governments.

These concerns could potentially be mitigated by CBDC design choices. A non-interest-bearing CBDC, for example, would be less attractive as a substitute for commercial bank money. In addition, a central bank might limit the amount of CBDC an end user could hold.



Something else which occurs to me is that when you buy hookers and blow with Federal Reserve notes (cash), the government can't track that.

But if the Fed issued digital currency, they would be able to monitor all financial transactions which use that method.

The Fed's paper addresses this, too:

Consumer privacy: A general-purpose CBDC would generate data about users’ financial transactions in the same ways that commercial bank and nonbank money generates such data today. In the intermediated CBDC model that the Federal Reserve would consider, intermediaries would address privacy concerns by leveraging existing tools.

Prevention of financial crimes: Relatedly, financial institutions must comply with a robust set of rules that are designed to combat money laundering and the financing of terrorism. These rules include customer due diligence, recordkeeping, and reporting requirements. As noted above, any CBDC would need to be designed in a manner that facilitates compliance with these rules. Intermediated models for a U.S. CBDC have the distinct advantage of involving private-sector partners with established programs to help ensure compliance with these rules.



So what do you guys think about this?

The Fed is seeking input from the public.

Please provide any answers to questions by May 20, 2022, using the form at https:// www.federalreserve.gov/apps/forms/cbdc. It is not a requirement that all questions be answered.
 

CBDC = Cental Bank Digital Currency.

The Federal Reserve is exploring the implications of, and options for, issuing a CBDC. For the purpose of this paper, a CBDC is defined as a digital liability of the Federal Reserve that is widely available to the general public. While Americans have long held money predominantly in digital form—for example in bank accounts recorded as computer entries on commercial bank ledgers—a CBDC would differ from existing digital money available to the general public because a CBDC would be a liability of the Federal Reserve, not of a commercial bank.

[snip]

The Federal Reserve does not intend to proceed with issuance of a CBDC without clear support from the executive branch and from Congress, ideally in the form of a specific authorizing law.


The existing forms of money:

• Central bank money is a liability of the central bank. In the United States, central bank money comes in the form of physical currency issued by the Federal Reserve and digital balances held by commercial banks at the Federal Reserve.
• Commercial bank money is the digital form of money that is most commonly used by the public. Commercial bank money is held in accounts at commercial banks.
• Nonbank money is digital money held as balances at nonbank financial service providers. These firms typically conduct balance transfers on their own books using a range of technologies, including mobile apps


[snip]

Cryptocurrencies have not been widely adopted as a means of payment in the United States. They remain subject to extreme price volatility, are difficult to use without service providers, and have severe limitations on transaction throughput.13 Many cryptocurrencies also come with a significant energy footprint and make consumers vulnerable to loss, theft, and fraud.

Amen! Cryptocurrencies are nothing more than speculative vapor. They are as volatile as the price of natural gas.


Cash is currently the only central bank money that is available to the general public, and it remains an important and popular means of payment. According to a 2020 survey, U.S. consumers used cash for 19 percent of total transactions (6 percent by value).22 The Federal Reserve is committed to ensuring the continued safety and availability of cash and is considering a CBDC as a means to expand safe payment options, not to reduce or replace them. In some jurisdictions, however, digital payments have rapidly supplanted cash. While cash use in the United States fell from 40 percent of transactions in 2012 (12 percent by value) to 19 percent in 2020, other countries have seen more rapid declines.


Something which occurred to me while I was reading this paper:

A CBDC could fundamentally change the structure of the U.S. financial system, altering the roles and responsibilities of the private sector and the central bank.

Banks currently rely (in large part) on deposits to fund their loans. A widely available CBDC would serve as a close—or, in the case of an interest-bearing CBDC, near-perfect—substitute for commercial bank money. This substitution effect could reduce the aggregate amount of deposits in the banking system, which could in turn increase bank funding expenses, and reduce credit availability or raise credit costs for households and businesses.27 Similarly, an interest-bearing CBDC could result in a shift away from other low-risk assets, such as shares in money market mutual funds, Treasury bills, and other short-term instruments. A shift away from these other low-risk assets could reduce credit availability or raise credit costs for businesses and governments.

These concerns could potentially be mitigated by CBDC design choices. A non-interest-bearing CBDC, for example, would be less attractive as a substitute for commercial bank money. In addition, a central bank might limit the amount of CBDC an end user could hold.



Something else which occurs to me is that when you buy hookers and blow with Federal Reserve notes (cash), the government can't track that.

But if the Fed issued digital currency, they would be able to monitor all financial transactions which use that method.

The Fed's paper addresses this, too:

Consumer privacy: A general-purpose CBDC would generate data about users’ financial transactions in the same ways that commercial bank and nonbank money generates such data today. In the intermediated CBDC model that the Federal Reserve would consider, intermediaries would address privacy concerns by leveraging existing tools.

Prevention of financial crimes: Relatedly, financial institutions must comply with a robust set of rules that are designed to combat money laundering and the financing of terrorism. These rules include customer due diligence, recordkeeping, and reporting requirements. As noted above, any CBDC would need to be designed in a manner that facilitates compliance with these rules. Intermediated models for a U.S. CBDC have the distinct advantage of involving private-sector partners with established programs to help ensure compliance with these rules.


So what do you guys think about this?

The Fed is seeking input from the public.

Please provide any answers to questions by May 20, 2022, using the form at https:// www.federalreserve.gov/apps/forms/cbdc. It is not a requirement that all questions be answered.
Kiss your freedom good bye I'd this happens. Anyone who supports this is fucking stupid.
 

CBDC = Cental Bank Digital Currency.

The Federal Reserve is exploring the implications of, and options for, issuing a CBDC. For the purpose of this paper, a CBDC is defined as a digital liability of the Federal Reserve that is widely available to the general public. While Americans have long held money predominantly in digital form—for example in bank accounts recorded as computer entries on commercial bank ledgers—a CBDC would differ from existing digital money available to the general public because a CBDC would be a liability of the Federal Reserve, not of a commercial bank.

[snip]

The Federal Reserve does not intend to proceed with issuance of a CBDC without clear support from the executive branch and from Congress, ideally in the form of a specific authorizing law.


The existing forms of money:

• Central bank money is a liability of the central bank. In the United States, central bank money comes in the form of physical currency issued by the Federal Reserve and digital balances held by commercial banks at the Federal Reserve.
• Commercial bank money is the digital form of money that is most commonly used by the public. Commercial bank money is held in accounts at commercial banks.
• Nonbank money is digital money held as balances at nonbank financial service providers. These firms typically conduct balance transfers on their own books using a range of technologies, including mobile apps


[snip]

Cryptocurrencies have not been widely adopted as a means of payment in the United States. They remain subject to extreme price volatility, are difficult to use without service providers, and have severe limitations on transaction throughput.13 Many cryptocurrencies also come with a significant energy footprint and make consumers vulnerable to loss, theft, and fraud.

Amen! Cryptocurrencies are nothing more than speculative vapor. They are as volatile as the price of natural gas.


Cash is currently the only central bank money that is available to the general public, and it remains an important and popular means of payment. According to a 2020 survey, U.S. consumers used cash for 19 percent of total transactions (6 percent by value).22 The Federal Reserve is committed to ensuring the continued safety and availability of cash and is considering a CBDC as a means to expand safe payment options, not to reduce or replace them. In some jurisdictions, however, digital payments have rapidly supplanted cash. While cash use in the United States fell from 40 percent of transactions in 2012 (12 percent by value) to 19 percent in 2020, other countries have seen more rapid declines.


Something which occurred to me while I was reading this paper:

A CBDC could fundamentally change the structure of the U.S. financial system, altering the roles and responsibilities of the private sector and the central bank.

Banks currently rely (in large part) on deposits to fund their loans. A widely available CBDC would serve as a close—or, in the case of an interest-bearing CBDC, near-perfect—substitute for commercial bank money. This substitution effect could reduce the aggregate amount of deposits in the banking system, which could in turn increase bank funding expenses, and reduce credit availability or raise credit costs for households and businesses.27 Similarly, an interest-bearing CBDC could result in a shift away from other low-risk assets, such as shares in money market mutual funds, Treasury bills, and other short-term instruments. A shift away from these other low-risk assets could reduce credit availability or raise credit costs for businesses and governments.

These concerns could potentially be mitigated by CBDC design choices. A non-interest-bearing CBDC, for example, would be less attractive as a substitute for commercial bank money. In addition, a central bank might limit the amount of CBDC an end user could hold.



Something else which occurs to me is that when you buy hookers and blow with Federal Reserve notes (cash), the government can't track that.

But if the Fed issued digital currency, they would be able to monitor all financial transactions which use that method.

The Fed's paper addresses this, too:

Consumer privacy: A general-purpose CBDC would generate data about users’ financial transactions in the same ways that commercial bank and nonbank money generates such data today. In the intermediated CBDC model that the Federal Reserve would consider, intermediaries would address privacy concerns by leveraging existing tools.

Prevention of financial crimes: Relatedly, financial institutions must comply with a robust set of rules that are designed to combat money laundering and the financing of terrorism. These rules include customer due diligence, recordkeeping, and reporting requirements. As noted above, any CBDC would need to be designed in a manner that facilitates compliance with these rules. Intermediated models for a U.S. CBDC have the distinct advantage of involving private-sector partners with established programs to help ensure compliance with these rules.


So what do you guys think about this?

The Fed is seeking input from the public.

Please provide any answers to questions by May 20, 2022, using the form at https:// www.federalreserve.gov/apps/forms/cbdc. It is not a requirement that all questions be answered.
I can't wait for my very own legal US cryptocurrency to buy my virtual spot in the metaverse.
 
I thought I heard where crypto values took a giant shit recently.

Yep, just like the fed to look at something that's on the express elevator to the bottom and say, "hey, let's do that too".
 
I thought I heard where crypto values took a giant shit recently.

Yep, just like the fed to look at something that's on the express elevator to the bottom and say, "hey, let's do that too".
This is different from Bitcoin. It is what is known as a "stablecoin". It will be pegged to the US dollar.
 
They just want to get rid of cash.
I do not support this idea.
Cash is almost extinct.

From the white paper:

While cash use in the United States fell from 40 percent of transactions in 2012 (12 percent by value) to 19 percent in 2020, other countries have seen more rapid declines. In Sweden, for example, the proportion of cash payments fell from 33 percent to less than 10 percent over the same period. In China, 50 percent of point-of-sale (POS) payments are made with a mobile wallet or app, while cash accounts for just 13 percent of POS payments. If these trends were to emerge in the United States, consumers might want the option of digitized central bank money that, like cash, would have no credit or liquidity risk attached to it.
 
These are the questions the Fed would like the public to answer:

CBDC Benefits, Risks, and Policy Considerations

1. What additional potential benefits, policy considerations, or risks of a CBDC may exist that have not been raised in this paper?

2. Could some or all of the potential benefits of a CBDC be better achieved in a different way?

3. Could a CBDC affect financial inclusion? Would the net effect be positive or negative for inclusion?

4. How might a U.S. CBDC affect the Federal Reserve’s ability to effectively implement monetary policy in the pursuit of its maximum-employment and price-stability goals?

5. How could a CBDC affect financial stability? Would the net effect be positive or negative for stability?

6. Could a CBDC adversely affect the financial sector? How might a CBDC affect the financial sector differently from stablecoins or other nonbank money?

7. What tools could be considered to mitigate any adverse impact of CBDC on the financial sector? Would some of these tools diminish the potential benefits of a CBDC?

8. If cash usage declines, is it important to preserve the general public’s access to a form of central bank money that can be used widely for payments?

9. How might domestic and cross-border digital payments evolve in the absence of a U.S. CBDC?

10. How should decisions by other large economy nations to issue CBDCs influence the decision whether the United States should do so?

11. Are there additional ways to manage potential risks associated with CBDC that were not raised in this paper?

12. How could a CBDC provide privacy to consumers without providing complete anonymity and facilitating illicit financial activity?

13. How could a CBDC be designed to foster operational and cyber resiliency? What operational or cyber risks might be unavoidable?

14. Should a CBDC be legal tender?

CBDC Design

15. Should a CBDC pay interest? If so, why and how? If not, why not?

16. Should the amount of CBDC held by a single end user be subject to quantity limits?

17. What types of firms should serve as intermediaries for CBDC? What should be the role and regulatory structure for these intermediaries?

18. Should a CBDC have “offline” capabilities? If so, how might that be achieved?

19. Should a CBDC be designed to maximize ease of use and acceptance at the point of sale? If so, how?

20. How could a CBDC be designed to achieve transferability across multiple payment platforms? Would new technology or technical standards be needed?

21. How might future technological innovations affect design and policy choices related to CBDC?

22. Are there additional design principles that should be considered? Are there tradeoffs around any of the identified design principles, especially in trying to achieve the potential benefits of a CBDC?
 
The European Central Bank has started a CBDC project.


 
Question 15: Should a CBDC pay interest? If so, why and how? If not, why not?

Commercial banks will be virulently opposed to a CBDC paying interest. The banks will lose deposits if the CBDC pays interest, and under the fractional reserve banking system this would severely crimp the ability of commercial banks to make loans/extend credit. To make the same profits, they would have to charge more interest. To keep depositors, they would have to pay a higher interest rate than the CBDC, which also means they would have to charge a higher interest rate on loans.
 

CBDC = Cental Bank Digital Currency.

The Federal Reserve is exploring the implications of, and options for, issuing a CBDC. For the purpose of this paper, a CBDC is defined as a digital liability of the Federal Reserve that is widely available to the general public. While Americans have long held money predominantly in digital form—for example in bank accounts recorded as computer entries on commercial bank ledgers—a CBDC would differ from existing digital money available to the general public because a CBDC would be a liability of the Federal Reserve, not of a commercial bank.

[snip]

The Federal Reserve does not intend to proceed with issuance of a CBDC without clear support from the executive branch and from Congress, ideally in the form of a specific authorizing law.


The existing forms of money:

• Central bank money is a liability of the central bank. In the United States, central bank money comes in the form of physical currency issued by the Federal Reserve and digital balances held by commercial banks at the Federal Reserve.
• Commercial bank money is the digital form of money that is most commonly used by the public. Commercial bank money is held in accounts at commercial banks.
• Nonbank money is digital money held as balances at nonbank financial service providers. These firms typically conduct balance transfers on their own books using a range of technologies, including mobile apps


[snip]

Cryptocurrencies have not been widely adopted as a means of payment in the United States. They remain subject to extreme price volatility, are difficult to use without service providers, and have severe limitations on transaction throughput.13 Many cryptocurrencies also come with a significant energy footprint and make consumers vulnerable to loss, theft, and fraud.

Amen! Cryptocurrencies are nothing more than speculative vapor. They are as volatile as the price of natural gas.


Cash is currently the only central bank money that is available to the general public, and it remains an important and popular means of payment. According to a 2020 survey, U.S. consumers used cash for 19 percent of total transactions (6 percent by value).22 The Federal Reserve is committed to ensuring the continued safety and availability of cash and is considering a CBDC as a means to expand safe payment options, not to reduce or replace them. In some jurisdictions, however, digital payments have rapidly supplanted cash. While cash use in the United States fell from 40 percent of transactions in 2012 (12 percent by value) to 19 percent in 2020, other countries have seen more rapid declines.


Something which occurred to me while I was reading this paper:

A CBDC could fundamentally change the structure of the U.S. financial system, altering the roles and responsibilities of the private sector and the central bank.

Banks currently rely (in large part) on deposits to fund their loans. A widely available CBDC would serve as a close—or, in the case of an interest-bearing CBDC, near-perfect—substitute for commercial bank money. This substitution effect could reduce the aggregate amount of deposits in the banking system, which could in turn increase bank funding expenses, and reduce credit availability or raise credit costs for households and businesses.27 Similarly, an interest-bearing CBDC could result in a shift away from other low-risk assets, such as shares in money market mutual funds, Treasury bills, and other short-term instruments. A shift away from these other low-risk assets could reduce credit availability or raise credit costs for businesses and governments.

These concerns could potentially be mitigated by CBDC design choices. A non-interest-bearing CBDC, for example, would be less attractive as a substitute for commercial bank money. In addition, a central bank might limit the amount of CBDC an end user could hold.



Something else which occurs to me is that when you buy hookers and blow with Federal Reserve notes (cash), the government can't track that.

But if the Fed issued digital currency, they would be able to monitor all financial transactions which use that method.

The Fed's paper addresses this, too:

Consumer privacy: A general-purpose CBDC would generate data about users’ financial transactions in the same ways that commercial bank and nonbank money generates such data today. In the intermediated CBDC model that the Federal Reserve would consider, intermediaries would address privacy concerns by leveraging existing tools.

Prevention of financial crimes: Relatedly, financial institutions must comply with a robust set of rules that are designed to combat money laundering and the financing of terrorism. These rules include customer due diligence, recordkeeping, and reporting requirements. As noted above, any CBDC would need to be designed in a manner that facilitates compliance with these rules. Intermediated models for a U.S. CBDC have the distinct advantage of involving private-sector partners with established programs to help ensure compliance with these rules.


So what do you guys think about this?

The Fed is seeking input from the public.

Please provide any answers to questions by May 20, 2022, using the form at https:// www.federalreserve.gov/apps/forms/cbdc. It is not a requirement that all questions be answered.
Crypto is highly speculative and frequently used for illegal activities. Not sure why the Fed is jumping into this. I would want to see a full feasibility study and then opine.
 

CBDC = Cental Bank Digital Currency.

The Federal Reserve is exploring the implications of, and options for, issuing a CBDC. For the purpose of this paper, a CBDC is defined as a digital liability of the Federal Reserve that is widely available to the general public. While Americans have long held money predominantly in digital form—for example in bank accounts recorded as computer entries on commercial bank ledgers—a CBDC would differ from existing digital money available to the general public because a CBDC would be a liability of the Federal Reserve, not of a commercial bank.

[snip]

The Federal Reserve does not intend to proceed with issuance of a CBDC without clear support from the executive branch and from Congress, ideally in the form of a specific authorizing law.


The existing forms of money:

• Central bank money is a liability of the central bank. In the United States, central bank money comes in the form of physical currency issued by the Federal Reserve and digital balances held by commercial banks at the Federal Reserve.
• Commercial bank money is the digital form of money that is most commonly used by the public. Commercial bank money is held in accounts at commercial banks.
• Nonbank money is digital money held as balances at nonbank financial service providers. These firms typically conduct balance transfers on their own books using a range of technologies, including mobile apps


[snip]

Cryptocurrencies have not been widely adopted as a means of payment in the United States. They remain subject to extreme price volatility, are difficult to use without service providers, and have severe limitations on transaction throughput.13 Many cryptocurrencies also come with a significant energy footprint and make consumers vulnerable to loss, theft, and fraud.

Amen! Cryptocurrencies are nothing more than speculative vapor. They are as volatile as the price of natural gas.


Cash is currently the only central bank money that is available to the general public, and it remains an important and popular means of payment. According to a 2020 survey, U.S. consumers used cash for 19 percent of total transactions (6 percent by value).22 The Federal Reserve is committed to ensuring the continued safety and availability of cash and is considering a CBDC as a means to expand safe payment options, not to reduce or replace them. In some jurisdictions, however, digital payments have rapidly supplanted cash. While cash use in the United States fell from 40 percent of transactions in 2012 (12 percent by value) to 19 percent in 2020, other countries have seen more rapid declines.


Something which occurred to me while I was reading this paper:

A CBDC could fundamentally change the structure of the U.S. financial system, altering the roles and responsibilities of the private sector and the central bank.

Banks currently rely (in large part) on deposits to fund their loans. A widely available CBDC would serve as a close—or, in the case of an interest-bearing CBDC, near-perfect—substitute for commercial bank money. This substitution effect could reduce the aggregate amount of deposits in the banking system, which could in turn increase bank funding expenses, and reduce credit availability or raise credit costs for households and businesses.27 Similarly, an interest-bearing CBDC could result in a shift away from other low-risk assets, such as shares in money market mutual funds, Treasury bills, and other short-term instruments. A shift away from these other low-risk assets could reduce credit availability or raise credit costs for businesses and governments.

These concerns could potentially be mitigated by CBDC design choices. A non-interest-bearing CBDC, for example, would be less attractive as a substitute for commercial bank money. In addition, a central bank might limit the amount of CBDC an end user could hold.



Something else which occurs to me is that when you buy hookers and blow with Federal Reserve notes (cash), the government can't track that.

But if the Fed issued digital currency, they would be able to monitor all financial transactions which use that method.

The Fed's paper addresses this, too:

Consumer privacy: A general-purpose CBDC would generate data about users’ financial transactions in the same ways that commercial bank and nonbank money generates such data today. In the intermediated CBDC model that the Federal Reserve would consider, intermediaries would address privacy concerns by leveraging existing tools.

Prevention of financial crimes: Relatedly, financial institutions must comply with a robust set of rules that are designed to combat money laundering and the financing of terrorism. These rules include customer due diligence, recordkeeping, and reporting requirements. As noted above, any CBDC would need to be designed in a manner that facilitates compliance with these rules. Intermediated models for a U.S. CBDC have the distinct advantage of involving private-sector partners with established programs to help ensure compliance with these rules.


So what do you guys think about this?

The Fed is seeking input from the public.

Please provide any answers to questions by May 20, 2022, using the form at https:// www.federalreserve.gov/apps/forms/cbdc. It is not a requirement that all questions be answered.
I think crypto in any form is a terrible idea
 
We already HAVE a digital money system. I see no reason to change that.
There are millions of Americans who are unbanked. They do not participate in the current system. A CBDC would allow them to do so.
 
There are millions of Americans who are unbanked. They do not participate in the current system. A CBDC would allow them to do so.
So their fluid money would be on their phones?
 
There are millions of Americans who are unbanked. They do not participate in the current system. A CBDC would allow them to do so.

Starting a bank account isn’t very difficult.

What’s stopping those ‘millions of Americans’?

Other then pure laziness?
 

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