Opposition to CBDCs grows after U.S-based Cato argues against its ‘risks’
- CBDC issued by the U.S. poses risks to financial privacy and economic freedom, claimed report
- CBDCs don’t provide unique or even additional benefits when compared to private sector alternatives, it added
A central bank digital currency (CBDC) issued by the United States will be a risk to the financial privacy and economic freedom of Americans, as per a recent report published by a Washington, D.C.-based policy research think tank Cato Institute.
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The U.S. government is looking into creating a CBDC, which is nothing but a digital dollar backed by the Federal Reserve. According to the report, this development poses a clear threat to citizen privacy and the free market. CBDCs raise serious concerns about citizen privacy, free market destabilization, and cybersecurity. These digital currencies pose a fundamental threat to America’s core liberties, “at a cost that far outweighs the ostensible benefits that proponents promise,” it added
The Cato report also argued that there should be no CBDCs in the American economy and that Congress should explicitly forbid the Federal Reserve and the Department of the Treasury from issuing any form of CBDC.
Though not immune, the private financial sector has the distinct advantage of being more decentralized than the federal government. According to the report,
“Whereas an IRS breach puts all 333 million Americans at risk, a breach at a private financial institution would affect only a fraction of citizens.”
In fact, these privacy concerns may extend beyond the U.S. Especially as the Federal Reserve estimates that 60% of global financial liabilities and claims are denominated in USD.
Potential surveillance tool?
The report went on to say that CBDCs do not provide unique, or even additional, benefits when compared to existing private sector alternatives. Stablecoins and other private-sector cryptocurrencies, for example, already provide innovative solutions for financial inclusion and faster payments.
Here, it must be noted that Republican Congressman Tom Emmer also warned of the risks of a “surveillance-style CBDC.” This, while speaking of the dangers of financial control at the Cato Institute last month. The Congressman referred to CBDCs as “government-controlled, programmable money that can easily be weaponized into a surveillance tool.”