A former U.S. Securities and Exchange Commission (SEC) official says introducing a central bank digital currency (CBDC) may be the most absurd financial idea in the history of monetary policy.
Ex-chief of the SEC Office of Internet Enforcement John Reed Stark say the CBDC does not solve any problem at all as trusted digital currencies already exist that are regulated by the government agencies and US registered financial institutions.
He says what the digital dollar would actually do would raise policy issues.
“The risks of a CBDC remain numerous and raise a variety of important policy questions, including how a CIBC can affect the market structure of the financial sector, the cost and availability of credit, the safety and stability of the financial system and the effectiveness of monetary policy. can influence. .”
According to Stark, the creation of a CBDC will also create a host of privacy and security issues, similar to opening a Pandora’s box.
“Not only does a CBDC create a host of unnecessary risks related to global financial system stability, but a CBDC also opens a Pandora’s box of global financial privacy concerns, conflict and cybersecurity concerns.”
Stark says having a CBDC isn’t worth the associated costs and challenges. He then voices support for proposed legislation that seeks to prohibit the Federal Reserve from creating a direct-to-consumer CBDC. Senator Ted Cruz, who introduced the law, says the digital dollar could be used as a government financial oversight tool.
says Stark,
“It is like building a bridge to nowhere in the middle of a desert under the favorable conditions of technical modernization – and then proclaiming the project a triumphant social panacea. Whatever his rationale, Senator Ted Cruz gets it right with his CBDC ban legislation — it’s a bad idea that death should be stopped in its tracks.
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