According to researchers from the Cato Institute, the digital dollar (CBDC) is a “solution in search of a problem” for the United States.
Cato Institute analysts examined public feedback on the Fed’s prospect of introducing the digital dollar. More than 66% of the 2,052 commenters expressed negative attitudes about the idea of introducing a CBDC. Some of the main reasons for this include concerns about the loss of financial privacy and possible risks to the U.S. financial system’s stability.
After sifting out blank votes and comments related to government contracts, the percentage of negatively-minded citizens increased to 71%. Another 17% are neutral, and only 12% are positive.
Proponents of the digital dollar see the following benefits in the CBDC:
- opportunity for economic competition in the international arena;
- reduction of environmental costs of paper currency production;
- increasing transparency and confidence in the financial system.
As a matter of fact, in the business community, about 30% treat CBDCs positively and 40% — negatively. Analysts believe this imbalance in the attitude to the issue is caused by the financial interest of business and the ties of large companies with the public sector. It is also noted that a number of banks and credit unions reacted with doubt to the Fed’s initiative. Among them are the Credit Union National Association (CUNA), the Bank Policy Institute (BPI), the American Bankers Association (ABA), and other organizations.
It is also important to clarify that the Cato Institute is a private libertarian think tank that opposes a central bank digital currency (CBDC), viewing its introduction as an attempt to control people’s money by the government.
Recall that the Senate plans to mandate the U.S. Department of the Treasury to issue the digital dollar. Analysts of the U.S. Treasury Department have already conducted a study in which they found that the digital dollar can improve the banking system’s stability. Moreover, nine of the ten global central banks are also studying CBDCs, and major international financial institutions are encouraging central banks to cooperate in developing common standards for CBDCs for future interoperability.
