Bitcoin Think Tank Says No to CBDCs and Gives Confidence to…
Central bank digital currencies (CBDCs) should be rejected, and instead the US should look to Bitcoin (BTC) and stablecoins, according to the US think tank Bitcoin Policy Institute.
Authors including former Kraken growth manager Dan Held and Texas Bitcoin Foundation CEO Natalie Smolenski Ph.D. argue that CBDCs will deprive the general public of economic autonomy, privacy and freedom in a whitepaper published on 27 September.
The US Federal Reserve has yet to decide whether to implement a CBDC or examine the potential risks and benefits that may be associated with it.
The central bank published a discussion paper outlining the advantages and disadvantages of CBDCs, but did not mention the long-term goals.
According to a study, CBDCs can be used to facilitate cross-border payments, support the preservation of the US dollar, ensure financial inclusion and increase public access to central bank money. They are also free from credit and liquidity problems.
The problem with CBDCs
Smolenski and Held argued that because government infrastructure is a “target of constant and escalating cyberattacks,” CBDCs would essentially “give governments direct access to every transaction […] performed by any person anywhere in the world.” They added that this could then be made available for “global review.”
A further claim by the duo was that CBDCs will give governments the ability to “prohibit, require, disincentivize, incentivize or reverse transactions, making them tools of financial censorship and control.” They noted,
“As a direct responsibility of central banks, the CBDC becomes a new vanguard for imposing monetary policy directly on consumers: such policies include, but are not limited to, negative interest rates, penalties on savings, tax increases and currency confiscation.”
This increased emphasis on surveillance, according to Smolenski and Held, would resemble “the Chinese government’s surveillance activities” by giving the state visibility over any financial transactions not already tracked by the digital banking system.
Many of the tasks offered by CBDCs, according to the authors, can already be performed using a combination of Bitcoin, privately issued stablecoins and even US dollars. They also noted,
“For most people, a combination of physical cash, bitcoin, digital dollars, and well-secured stablecoins will cover virtually every use case.”
Bitcoin and stablecoin to the rescue
Smolenski argued that digital dollars and stablecoins will continue to be subject to anti-money laundering and know-your-customer compliance by “the platforms that facilitate transactions with them,” while Bitcoin and private stablecoins will allow instant, low-cost digital transactions both domestically and on across national borders.
Some nations, such as China, are already well on their way to CBDC development, but earlier this month President Joe Biden gave the impression that the US might consider doing the same after ordering the Office of Science and Technology Policy (OSTP) to compile a report analyzing 18 CBDC systems.
One of the authors’ main concerns with CBDCs is the lack of government knowledge, coupled with potential privacy breaches and control, which is one of the reasons past conversations around CBDCs in the US have been defined by disagreement and misunderstanding.
