Experts at Cato Institute Warn of CBDC’s Potential to Undermine Financial Privacy
A new policy analysis document by the CATO Institute suggests that a central bank digital currency (CBDC) may pose a risk to American citizens’ financial privacy. The authors point to the opposition expressed in two-thirds of the 2,052 comment letters sent to the U.S. Federal Reserve about plans to launch a CBDC. The document outlines the concerns raised by CBDC opponents and how the risks associated with it make the CBDC unsuitable for Americans. The authors warn that the issuance of the CBDC would be the “single largest assault to financial privacy since the creation of the Bank Secrecy Act and the establishment of the third-party doctrine.”
The authors claim that the CBDC could give the government complete visibility into every financial transaction made by establishing a direct link between the government and each citizen’s financial activity. This, they argue, could result in unchecked government surveillance over financial information. The authors assert that this threat to privacy, combined with the likelihood of a loss of financial freedom, poses a significant risk to American citizens.
To prevent these risks, the authors recommend that the U.S. Congress should explicitly prohibit the U.S. Treasury and central bank from issuing digital currency in any form. They suggest that this can be achieved by amending Section 13 of the Federal Reserve Act and limiting the U.S. Treasury’s authority to expand existing offerings. Furthermore, they suggest that the U.S. Congress should require regular third-party audits of the Fed’s compliance with the Depository Institutions Deregulation and Monetary Control Act’s cost recovery provisions.
Clever Robot News Desk 10th April 2023