Yesterday, the Cato Institute published a report “assessing the risks and dispelling the myths” of central bank digital currencies (CBDCs). As a libertarian think tank, the organization is broadly opposed to a federally controlled digital dollar, arguing that the costs are high and the benefits minimal. The paper concludes by arguing that Congress should oppose any government plans to issue a CBDC.
The report begins with the claim that CBDCs constitute a fundamental threat to America’s core freedoms, “a cost that far outweighs the purported benefits that proponents promise.” Despite this, the authors note that central bankers in the U.S. and beyond have flocked to CBDCs in an effort to assert control over payments systems, something that “should have no place in the American economy.”
The paper then goes on to challenge four proponents’ claims about the benefits of CBDCs, arguing that they all fail to stand up to scrutiny: that they would 1) promote financial inclusion, 2) spur faster payments, 3) protect the dollar’s role as a world reserve currency, and 4) facilitate the implementation of monetary policy.
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