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Conservative US Political Organization Slams Against CBDCs, Praises Bitcoin, Private Stablecoins

A fiscally conservative think tank doubts that central bank digital currencies (CBDCs) would be beneficial, and wonders if they could even lead to negative outcomes.
In a new policy brief, the Club for Growth challenges several of the key arguments in favor of issuing a government-backed cryptocurrency put forward by central banks.

“CBDCs appear to be a solution to a problem. There is no apparent market failure that CBDCs correct.

The idea that CBDCs could help fund the unbanked without crowding out the services of private commercial banks seems dubious.

The so-called improvements in monetary policy would consist of the central bank’s ability to circumvent the so-called zero floor on nominal interest rates, although it is not entirely clear whether this is an actual constraint on monetary policy or whether such a property is desirable.”

investment tip Conservative US Political Organization Slams Against CBDCs, Praises Bitcoin, Private Stablecoins, Crypto Trading News

Zero bound is a term that refers to when central banks are unable to stimulate an economy by lowering short-term interest rates that are already at or near zero.

The report adds that the prospect of CBDCs fully replacing cash would deprive citizens of their right to privacy when conducting routine transactions.

“The eventual abolition of physical currency would undoubtedly leave people worse off compared to the status quo and is part of a larger privacy threat posed by CBDCs.”

When it comes to CBDCs being touted as a solution to slow payment processing speeds, the Club for Growth says that “by no means does a CBDC present an obvious, superior alternative” to other privately built centralized ledgers like dollar-pegged stablecoins and Bitcoin (BTC).

The letter concludes by noting that while the current financial system faces a number of challenges, central bank digital currencies are unlikely to offer consumers the best set of solutions.

“Proponents argue that CBDCs would offer significant benefits in the form of greater financial inclusion, faster payment processing, greater flexibility for monetary policy, and a reduction in tax evasion and illegal physical currency activity.

Even taking all of these goals for granted, there is little reason to believe that a CBDC is the optimal policy solution to bring about these changes. Private solutions would undoubtedly be a better way to make the payment system more efficient.

It is not obvious that monetary policy needs additional flexibility, and all the benefits of getting rid of physical currency need to be weighed against the costs of digital surveillance and loss of privacy.”

Featured image: Shutterstock/Ana Aguirre Perez/Webuz

Source: Crypto News Deutsch

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