US think tank Bitcoin Policy Institute wants the US to reject central bank digital currencies (CBDCs), and look at bitcoin (BTC) and stablecoins as alternatives.
In a white paper shared on September 27, the authors, including Texas Bitcoin Foundation executive director Natalie Smolenski PhD and former Kraken chief growth officer Dan Held, argue that CBDCs would limit public financial control, privacy and freedom.
#CBDCs do not solve any problem.
They extend the control of the state to the last free spheres of the economic life of the individual.
My latest white paper for the #Bitcoin Policy Institute. ⬇️ https://t.co/PS4rOlvcOw
— Natalie Smolenski (@NSmolenski) September 27, 2022
#CBDCs don’t solve any problems. They extend state control to the last free spheres of the individual’s economic life. My latest white paper for the #Bitcoin Policy Institute. ⬇️ https://t.co/PS4rOlvcOw- Natalie Smolenski (@NSmolenski) September 27, 2022
Smolenski and Held argued that CBDCs would essentially “provide governments with direct access to all transactions […] to be performed by anyone anywhere in the world,” adding that it could then be available for “global auditing,” as government infrastructure is a “constant and growing target of cyber-attacks.”
The pair also argued that a CBDC would allow governments to “prohibit, require, discourage, encourage or reverse transactions, making them tools of financial censorship and control”.
“As a direct responsibility of central banks, CBDCs are at the forefront of imposing monetary policy directly on consumers: these policies include, but are not limited to, negative interest rates, savings penalties, tax increases and currency confiscation. »
Smolenski and Held point out that this increased attention to surveillance will mimic the “surveillance efforts of the Chinese government,” giving state-level visibility to all financial transactions already detected by the digital banking system.
“As the world follows China’s path in the 21st century, the United States should stand for something different. “, It is said.
According to the authors, many of the functions performed by CBDCs can already be solved by a combination of bitcoins, privately issued stablecoins, and even the US dollar, noting:
“For most people, a combination of physical cash, bitcoin, digital dollars, and well-secured stablecoins will cover almost any monetary use case. »
Smolenski argued that bitcoins and private conventions will enable instant, low-cost digital transactions within and across borders. While digital dollars and stablecoins will continue to be subject to money laundering and compliance with customer notices by “the platforms that facilitate transactions with them,” adding:
“CBDCs just need to be created. »
The white paper also argues that governments are often overwhelmed by new technologies, as illustrated by an incident earlier this year when the Eastern Caribbean Central Bank’s CBDC, DCash, was taken offline.
“Indeed, when governments lead the implementation of CBDCs, serious issues of stability and reliability arise. “, they write.
CBDCs are well underway in some countries, such as China. But earlier this month, President Joe Biden indicated that the United States was considering a follow-up suit, after asking the Office of Science and Technology Policy (OSTP) to submit a report analyzing 18 models CBDC.
Previous discussions of CBDCs in the United States have been marked by division and confusion, which is one of the authors’ main problems with CBDCs, a lack of expertise on the part of governments, as well as potential violations of privacy and control.
CBDCs are a threat to human freedom.
— Dan Held (@danheld) September 27, 2022
CBDCs are a threat to human freedom. — Dan Held (@danheld) September 27, 2022
To combat what they see as problems with CBDCs, Smolenski and Held offer stablecoins pegged to fiat currencies, backed in a 1:1 ratio by strong collateral that can be issued by private banks around the world.
Also read: It’s Now or Never: The US Must Prepare for Digital Currency!
“This would enable end users to benefit from all the supposed benefits of the CBDCs, without excluding the levels of supervision and control that a CBDC provides to the state. “, they said.
“The United States should stand for something different: it should stand for freedom. For that reason, they should reject central bank digital currencies. »
The Bitcoin Policy Institute describes itself as a non-partisan, non-profit organization that researches the political and societal implications of bitcoin and emerging monetary networks.