The D.C.-based think tank views a central bank digital currency as a danger to citizens’ privacy. 



A report from the Cato Institute argues that a United States government-published central bank digital currency, or CBDC, would usurp the private sector and threaten citizens ’ privacy and core freedoms.

The U.S. government is investigating the creation of a CBDC, essentially a digital dollar that would be backed by the Federal Reserve. According to analysis from the Cato Institute — a Washington, D.C.- based policy exploration think tank — this represents a clear and present danger to citizen privacy and the free market.

The institute minced no terms in the phrasing of the report’s ultimate takeaway, stating that CBDCs “ should have no place in the American economy ” and that “ Congress should explicitly prohibit the Federal Reserve and the Department of the Treasury from issuing a CBDC in any form. ”

The primary arguments against the development of a government-issued CBDC, according to the Cato Institute, involve fears over tracking and control, destabilization of the free market, and cybersecurity.

“ The private sector isn't immune either, but it does have the distinct advantage of being more decentralized than the federal government, ” writes the authors of the report, which continues, “ Whereas an IRS breach puts all 333 million Americans at threat, a breach at a private financial institution would affect only a fraction of citizens. ”

These privacy concerns could extend beyond the United States, as some 60% of global financial liabilities and claims are nominated in U.S. dollars, according to the Federal Reserve.

Related: CBDCs could be ‘ easily weaponized ’ to spy on US citizens Congressman

It’s unclear at this time if and when the U.S. intends to issue a CBDC — although the Federal Reserve’s FedNow service, a state-operated instant transaction banking portal, is scheduled to go online in July.

(TRISTAN GREENE, Cointelegraph, 2023)