On April 4, the Cato Institute made public a report “assessing the risks and dispelling the myths” on central bank digital currencies (CBDCs). This free Washington, DC-based policy research think tank has hammered home its opposition to a digital dollar. The report recommends that the US Congress oppose it.
The Cato Institute findings on CBDCs
For some time, the US government has been considering creating a CBDC. It would essentially be a digital dollar backed by the Federal Reserve. But the Cato Institute published a analysis which presents this digital dollar as a danger clear for privacy and the free market.
The institute has been pretty tough on the idea of a CBDC, especially if it’s controlled by the government. Corner Telegraph. In particular, he stated that the CBDCs” should have no place in the American economy » and ” Congress should explicitly prohibit the Federal Reserve and the Treasury Department from issuing a CBDC in any form “.
The Cato Institute cites concerns about monitoring and control and the destabilization of the free market against the development of CBDCs as a priority.
What alternative is offered?
The US government cited some reasons for the usefulness of CBDCs. It was, for example, promote financial inclusion, enable faster payments. Furthermore, they could protect the dollar’s position as the world’s reserve currency and facilitate the implementation of monetary policy.. But the Cato Institute thinks that a CBDC would not be the best solution to fulfill these missions.
The authors of the report believe that the focus should be on increasing existing financial protections. Indeed, they claim that strengthening existing solutions could help better defend the international status of the dollar.. They believe that introducing a digital dollar could contribute to weakening it.
At Cato Institute, we talk about stablecoins as better solutions. The report even states that private sector cryptocurrencies would be a better alternative. Indeed, if a crypto fails, it will affect only part of the population. But if the digital dollar has a problem, the whole country will be affected.. Could stablecoins win their battle against CBDCs?
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