* The White House today criticized the volatility and lack of transparency amongst decentralized cryptocurrencies, and promoted research into a Fed-controlled cryptocurrency known as a Central Bank Digital Currency (CBDC)
* Crypto experts speaking to the Daily Caller News Foundation questioned what a CBDC could provide to the U.S. economy that wasn’t already provided by private alternatives that were less invasive.
* One expert noted that CBDCs could potentially be used for more than simple surveillance, putting active limits or mandates on people’s uses of their own money.
The White House today released a fact sheet that criticized the risks of decentralized cryptocurrencies while promoting a centralized Fed-control “digital dollar,” which experts told the Daily Caller News Foundation came with significant privacy risks.
The White House criticized the transparency of digital currencies and the volatile nature of cryptocurrencies, claiming that a U. S.-sponsored cryptocurrency known as a Central Bank Digital Currency (CBDC) could potentially achieve a variety of goals including protecting national security, advancing financial inclusion and promoting economic growth, pend ing research. Experts and congressional representatives who spoke to the DCNF expressed skepticism that a CBDC would meaningfully benefit people, and concerns that the technology could be used to monitor and even limit people’s ability to make their own economic decisions. (RELATED: White House Labels Cryptocurrency Mining A Climate Threat)
“Really the greatest benefit that a CBDC can offer is not for you or me on the street, but rather for the government’s efforts to surveil financial activity,” said Nicholas Anthony, a policy analyst with the Cato Institute’sCenter for Monetary and Fiscal Alternatives, in an interview with the DCNF. “It gives them a new level of control over surveilling individual accounts… like being able to control it.”
Anthony noted a common anecdote he had heard from proponents of CBDCs would be the ability for parents to put controls on their children’s spending, for example. However, this technology could just as easily be used to restrict adults’ purchases, such as on alcohol or tobacco products, Anthony said.
But listing “privacy protected” and “identity verified” at opposite ends of the Fed’s goals does not put the two ideas any less in conflict: the best form of data protection is no data collection.
Anthony’s comments mirror those made by Minneapolis Federal Reserve Chair Neel Kashkari who, speaking at a panel hosted at Columbia University, said that he had no idea what problem CBDCs solved, noting that he could said anyone in the room five dollars on the popular mobile payment app Venmo “right now.”
“What is it that a CBDC can do that Venmo can’t do?” Kashkari asked a snickering audience. He went on to note that CBDC advocates sometimes cited China as an example of a country where CBDCs were working.
“I can see why China would do it,” he said. “If they want to monitor every one of your transactions, you could do that with a [CBDC], you can’t do that with Venmo.”… (Read more)