Friday, June 9, 2023

A new type of currency called a “central bank digital currency” (CBDC) could be bad news for our financial privacy. That’s what the CATO Institute, an organization dedicated to policy analysis, has said. They believe that Congress should take action and stop the Federal Reserve and Treasury from making this new type of currency available.

“The CATO Institute Warns

Recently, the CATO Institute released a document saying that a digital currency created by the U.S Federal Reserve may not be good for Americans. To back up their point, they showed that out of 2,052 comments sent to the U.S Federal Reserve, two-thirds of them were against launching the CBDC (central bank digital currency).

Two people, Nicholas Anthony and Norbert Michel have written a document about different types of money called CBDCs. This document explains why some people don’t think its a good idea for Americans to use CBDCs because it could make it harder for people to keep their finances private.

The government has special laws to help them watch what we spend our money on, like taxes and fighting terrorism. But things could get worse with the creation of a new type of currency that only the government can control. It would give the government access to everyone’s money transactions if its created, so basically they’d be able to track everything we do with our money.

The U.S. government wants to make a special type of money called the CBDC, but this could turn out to be one of the biggest attacks on people’s financial privacy since laws have been created to protect it.

Constitutional Protection

Anthony and Michel claim that a CBDC could be a danger for people’s privacy which is protected by the US Constitution. They also said that it would let the government control our financial activities, like not letting us buy certain things, encouraging us to buy other things, or freezing or taking away our money.

The policy document says that having a CBDC (a new type of money) might give hackers a good chance to do bad stuff.

The two authors think that the U.S Congress should change a law (called the Federal Reserve Act) to not let the U.S. Treasury or the Federal Reserve make any digital money such as cryptocurrency. They also want to limit what existing kinds of money the U.S. Treasury can produce.

The authors think the US Congress should make sure that an external third party regularly audits the amount of money recovered by the Federal Reserve Bank according to a law called Depository Institutions Deregulation and Monetary Control Act.

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