A report from the Cato Institute argues that a digital currency issued by the United States central bank, or CBDC, would usurp the private sector and threaten the privacy and fundamental freedoms of citizens.
The United States government is investigating the creation of a CBDC, basically a digital dollar that would be backed by the Federal Reserve. According to analysis by the Cato Institute, a Washington DC-based political research think tank, this represents a clear and present danger to citizen privacy and the free market.
The Institute does not mince words in drafting the report’s final conclusion, stating that CBDCs “should have no place in the US economy” and that “Congress should explicitly prohibit the Federal Reserve and Treasury Department from issuance of a CBDC in any of its forms”.
New: @EconWithNick explodes myths of central bank digital currencies (CBDCs) and exposes the key risks. https://t.co/7lqW18UhG4 @CatoCMFA
— Cato Daily Podcast (@CatoPodcast) April 4, 2023
The main arguments against developing a government-issued CBDC, according to the Cato Institute, include fears about monitoring and control, destabilizing the free market, and cybersecurity.
“The private sector is also not immune, but it has the distinct advantage of being more decentralized than the federal government,” the authors of the report write, continuing: “While a breach at the IRS puts all 333 million Americans at risk, a breach at a private financial institution would affect only a fraction of citizens.”
These privacy concerns could extend beyond the United States, as about 60% of global financial obligations and claims are denominated in US dollars, according to the Federal Reserve.
It is currently unclear if and when the United States intends to issue a CBDC, although the Federal Reserve’s FedNow service, a state-operated instant banking portal, is scheduled to go live this July.
According to an earlier report by Cointelegraph’s Brayden Lindrea, the ongoing debates on Capitol Hill remain a hot topic for some, with Congressman and Republican Majority Chairman Tom Emmer calling CBDCs potentially “dangerous” for both individual users and individuals. political opponents of the government.
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