• Investing
  • Stock
Round Table Thoughts
  • Economy
  • Editor’s Pick
Home Economy CBDC in the USA: Not Now, Not Ever
Economy

CBDC in the USA: Not Now, Not Ever

by December 13, 2022
by December 13, 2022 0 comment
Share
0
FacebookTwitterPinterestWhatsapp

Kevin Warsh, a former member of the Fed’s Board of Governors, writes in defense of a central bank digital currency (CBDC) in the Wall Street Journal. Mr. Warsh believes we need a digital dollar to keep up with China. “U.S. policy makers should heed the moment and respond with a strengthened form of the dollar in service to the national interest,” he counsels.

Mr. Warsh undoubtedly has the best of intentions, but following his advice would be disastrous. We should absolutely not implement a CBDC. Meeting the threat of an authoritarian rival by embracing perilous social-control technologies is totally contrary to the American ethos. By all means, invest in improvements to the U.S. payments system. But replacing that system with a CBDC, which would give the government unprecedented control over financial transactions, should be a non-starter.

To his credit, Mr. Wash recognizes the threats to financial privacy posed by a digital dollar. He clearly disfavors “retail” CBDCs—government payments processing for all households and firms. “This is at odds with the American ethos of privacy from government intrusion,” he writes.

“The specter of state surveillance of individual spending is dangerous,” Mr. Warsh continues. Instead, a digital dollar should be used “exclusively for wholesale transactions,” meaning between financial institutions such as banks. A wholesale CBDC “would more effectively intermediate payments among the government, financial firms and foreign central banks. Settlements would be made faster. Payments would be cheaper. Cross-border transfers would be seamless. Money creation would be more transparent,” he claims.

Perhaps so. But regardless of whether these benefits are real, Mr. Warsh massively underestimates the costs. Does anyone seriously believe that a U.S. CBDC that started as wholesale-only would remain wholesale-only? And once the inevitable wholesale-retail boundary is crossed, how long would it take for CBDC use to become mandatory? Government programs have a strong built-in tendency for growth beyond their original intents and purposes. We would be wise to heed the words of Milton Friedman: “Nothing is so permanent as a temporary government program.”

Just look at the government’s record with monetary institutions and policy. The Federal Reserve was created to fight bank runs, not conduct monetary policy. Defenders of the Federal Reserve Act of 1913 explicitly foreswore central banking. And, yet, here we are. 

When President Nixon closed the gold window in 1971, it was supposed to be a temporary measure. In retrospect, it severed the final, tenuous link of the dollar to gold. 

More recently, following the 2008 crisis, the Fed’s interest-on-reserves policy in an environment of abundant bank reserves was perceived to be a temporary accommodation to extraordinary circumstances. Now it seems the floor system has replaced the corridor system permanently. 

Temporary monetary interventions inevitably result in a permanent degradation of monetary institutions.

Last fall, I strongly recommended against a digital dollar in my own WSJ commentary. My conviction has only gotten stronger since then. We cannot permit a CBDC to gain a foothold in the U.S. The fact that the New York Fed, in conjunction with a handful of private banks, has implemented a “pilot” program with digital tokens is worrying enough. Under no circumstances should we allow the government to roll out a CBDC. As I warned a year ago, “All the benefits of this technology can be achieved through alternative and narrowly targeted policies. The costs, however, could be extreme…The best way to prevent a financial panopticon is to not build it at all.”

You Might Also Like
  • Trump blasts American leaders as no US citizens are among Hamas hostages recently released
  • Alex Murdaugh claims he learned about alleged jury tampering after sentencing
  • The Modern Day Forex Market
  • Ethereum strengthens with bearish momentum to the 200 EMA
Share
0
FacebookTwitterPinterestWhatsapp

previous post
Bitcoin soars over 5% on better-than-expected CPI
next post
Top 3 benefits of IoT for healthcare providers

You may also like

State Department cries false over WSJ report claiming US offered...

August 12, 2024

Speaker Johnson criticizes Secret Service director for RNC appearance: ‘Why...

July 18, 2024

McConnell in talks to endorse Trump in 2024 presidential race:...

March 6, 2024

SD lawmakers fail to override Gov. Noem’s cryptocurrency regulation veto

March 28, 2023

Trump has not been notified whether Manhattan DA plans to...

March 23, 2023

Israel-Hamas war: Details begin to emerge of life in captivity...

November 27, 2023

Trump says NY Judge Merchan ‘thinks he is above the...

April 25, 2024

Democrats come out swinging with tough-on-crime stance in deep-red state...

May 19, 2023

House lawmakers leave DC until September with government shutdown deadline...

July 27, 2024

First on Fox: Pompeo’s secret trip to North Korea detailed...

January 17, 2023

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Week Ahead: NIFTY Stays In A Defined Range; Moving Past This Level Crucial For Resumption Of Upmove

      May 31, 2025
    • Breakouts, Momentum & Moving Averages: 10 Must-See Stock Charts Right Now

      May 31, 2025
    • Leadership Rotation Could Confirm Corrective Phase

      May 30, 2025
    • Run Your Stock Portfolio Like a Pro Sports Team

      May 30, 2025
    • U.S. foreign tax bill sends jitters across Wall Street

      May 30, 2025

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be...

      June 27, 2024 2,765 views
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as...

      August 9, 2024 2,472 views
    • 3

      Biden appointee played key role in recruiting Chinese...

      June 25, 2024 2,451 views
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful...

      July 10, 2024 2,432 views
    • 5

      Harris VP pick spent years promoting research facility...

      August 29, 2024 2,308 views

    Categories

    • Economy (7,009)
    • Editor's Pick (2,106)
    • Investing (538)
    • Stock (2,582)

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be revived under new House GOP bill

      June 27, 2024
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as Harris camp blasts ‘lying’ critics

      August 9, 2024
    • 3

      Biden appointee played key role in recruiting Chinese businesses to Delaware: ‘Longtime friends’

      June 25, 2024
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful of Chinese spy threats

      July 10, 2024
    • 5

      Harris VP pick spent years promoting research facility that collaborated with ‘Chinese military company’

      August 29, 2024

    Latest News

    • Week Ahead: NIFTY Stays In A Defined Range; Moving Past...

      May 31, 2025
    • Breakouts, Momentum & Moving Averages: 10 Must-See Stock Charts Right...

      May 31, 2025
    • Leadership Rotation Could Confirm Corrective Phase

      May 30, 2025

    Categories

    • Economy (7,009)
    • Editor's Pick (2,106)
    • Investing (538)
    • Stock (2,582)

    Disclaimer: RoundTableThoughts.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2024 RoundTableThoughts.com. All Rights Reserved.

    Round Table Thoughts
    • Investing
    • Stock
    Round Table Thoughts
    • Economy
    • Editor’s Pick

    Read alsox

    JD Vance slams NY v. Trump...

    May 13, 2024

    Recent French riots heed warnings from...

    July 17, 2023

    McConnell urges more aid for Ukraine...

    October 31, 2023
    Sign In

    Keep me signed in until I sign out

    Forgot your password?

    Password Recovery

    A new password will be emailed to you.

    Have received a new password? Login here