The Cato Institute, a Washington D.C.-based policy research think tank, has released a report arguing that a government-issued central bank digital currency (CBDC) in the United States would pose a threat to citizens’ privacy and core freedoms, while usurping the private sector. The report states that CBDCs “should have no place in the American economy” and calls for Congress to explicitly prohibit the Federal Reserve and the Department of the Treasury from issuing a CBDC in any form.
According to the Cato Institute, the key arguments against creating a government-issued CBDC involve worries about monitoring and control, disruption of the free market, and cybersecurity. The report suggests that private financial institutions would be less of a risk for Americans’ privacy than a government-issued CBDC. The Federal Reserve reports that approximately 60% of worldwide financial liabilities and demands are expressed in U.S. dollars. The report comes as the U.S. government is investigating the creation of a CBDC, or digital dollar, that would be backed by the Federal Reserve.