Rhodilee Jean Dolor
A former official of the U.S. Securities and Exchange Commission (SEC) says the establishment of a central bank digital currency (CBDC) is possibly the most absurd financial idea in the history of monetary policy.
Ex-chief of the SEC Office of Internet Enforcement John Reed Stark says the CBDC does not solve any problem at all since trusted digital currencies regulated by the government authorities and US-registered financial institutions already exist.
He says what the digital dollar would actually do is give rise to policy issues.
“The risks of a CBDC remain myriad and raise a variety of important policy questions, including how a CIBC might affect financial-sector market structure, the cost and availability of credit, the safety and stability of the financial system and the efficacy of monetary policy.”
According to Stark, the creation of a CBDC will also unleash a multitude of privacy and security concerns, akin to opening a Pandora’s box.
“Not only does a CBDC create a multitude of unnecessary risks relating to global financial systemic stability, but a CBDC also opens up a Pandora’s box of global financial privacy problems, conflicts and cybersecurity concerns.”
Stark says having a CBDC is not worth the associated costs and challenges. He then expresses his 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 financial surveillance tool of the government.
Says Stark,
“It’s like building a bridge to nowhere in the middle of a desert under the auspicious of engineering modernization — and then proclaiming the project to be a triumphant societal panacea. Whatever his rationale, Senator Ted Cruz gets it right with his CBDC prohibitive legislation — it’s a bad idea that needs to be stopped dead in its tracks.”
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