The Bitcoin Policy Institute in the United States is calling for the United States to reject central bank digital currencies (CBDCs) and consider Bitcoin (BTC) and stablecoins as alternatives.
In a white paper published on Tuesday, authors including Texas Bitcoin Foundation CEO Natalie Smolensky and former Kraken growth leader Dan Held argue that digital central bank currencies will strip the public of financial oversight, privacy and freedom.
Smolensky and Held argued that central bank digital currencies would “provide governments with direct access to every transaction […] conducted by any individual anywhere in the world,” adding that this could become available for “global exposure,” because the infrastructure Government agencies are “a target of ongoing and escalating cyberattacks.”
The pair also argued that central bank digital currencies would enable governments to “block, order, discourage, incentivize or reverse transactions, making them instruments of financial oversight and oversight:”
“As the direct responsibility of central banks, central bank digital currencies have become a new vanguard for imposing monetary policy directly on consumers: these policies include, but are not limited to, negative interest rates, savings penalties, tax increases, and currency confiscations.”
Smolensky and Held suggest that this greater focus on surveillance would mimic “the Chinese government’s surveillance efforts” in projecting the country’s view of all financial transactions that are already unnoticed through the digital banking system.
“As the world goes down China’s path in the 21st century,” they argued, “the United States must stand for something different.”
The authors said that many of the functions provided by digital central bank currencies can already be solved by a mixture of bitcoin, privately issued stablecoins, and even the US dollar, noting:
“For most people, a mix of physical cash, bitcoin, digital dollars, and well-secured stablecoins will cover almost all cash use cases.”
Smolensky argued that Bitcoin and private stablecoins would allow for low-cost instant digital transactions locally and across borders, while digital dollars and stablecoins would remain subject to anti-money laundering and KYC compliance through “platforms that facilitate dealing,” adding:
“Creating basic digital currencies related to biodiversity is, quite simply, unnecessary.”
The white paper also argued that governments are often too far behind with new technology, citing an incident earlier this year when the Caribbean Central Bank’s central bank, DCash, went out of business.
“Indeed, as governments lead the implementation of digital central bank currencies, serious stability and reliability issues will arise,” they wrote.
CBDCs are already on the way to development in some countries such as China, but earlier this month President Joe Biden indicated that the US was considering taking the same approach after directing the Office of Science and Technology Policy (OSTP) to submit a report analyzing 18 CBDC systems.
Previous discussions of digital central bank currencies in the United States have been characterized by divisiveness and confusion, one of the author’s main problems with digital central bank currencies – a lack of experience by governments, along with potential privacy and control violations.
To combat what they see as concerns with digital central bank currencies, Smolenski and Held have proposed stable cryptocurrencies pegged to fiat currencies and backed 1:1 by solid collateral that could be issued by private banks around the world.
Related Topics: Now or Never – The United States Should Prepare Itself for Digital Currency
“This will provide all the purported benefits of central bank digital currencies to end users while eliminating the levels of oversight and oversight provided by state central bank digital currencies,” they said:
The United States must stand up for something different: it must stand up for freedom. For this reason, the United States should reject central bank digital currencies.”
The Bitcoin Policy Institute describes itself as a nonpartisan, nonprofit organization that researches the policies and societal implications of Bitcoin and its emerging monetary networks.
