The Heritage Foundation, a conservative United States think tank, implores that the government should focus on assuring the public that they can use any form of currency they want rather than releasing a central bank digital currency (CBDC).
This statement was part of their commentary piece which came public on the 12th of February. In it, they mentioned the Facebook Libra, saying that this particular global stablecoin project is the latest reminder that granting currency does not mean that it should be a national function of a specific government. It also explores the idea in which the public sector must ensure that the heart of a nation’s economic system must always be the sovereign currencies.
Heritage’s latest report suggests that the consumer sovereignty concept should just replace the monetary sovereignty principle that Lael Brainard, a US Federal Reserve’s Board of Governors’ member, spoke of this February. This further strengthens their appeal to support consumer decisions rather than centralizing one type of currency. Not only that, but they also singled out some of the most prevalent concerns regarding stablecoins and cryptocurrencies such as the high risk of crime and fraud – noting that the government does not have to develop their own currency in order to solve such problems.
Heritage Foundation reminds the public that the government could already regulate consumer losses, frauds, and criminal activity, on existing cryptocurrencies and payment systems right now. Thus, there is no need for a CBDC.
The tension between private banks and the Federal Reserve
This particular report does indeed contain a lot. It also entails concerns that the Federal Reserve should not go head to head with that of the private sector. The central bank has been rumored to compete with private banks using their real-time payment tool, which, if confirmed, may prove to be a significant threat to them. The report by the Foundation argues that establishing a CBDC would also be disadvantageous to the private sector.
They went as far as saying that, at the end of it, CBDC would enable the federal government to have full authority over the money going in and out of every citizen’s bank accounts. Heritage Foundation says that such power given to the government is just not compatible with political and economic freedom.
The latest talks regarding CBDC
Brainard has also mentioned that the institution is now more open to talking about the idea of a central bank digital currency as per an earlier report this month. Just yesterday, Congressman Bill Foster asked an official of a Federal Reserve about the progress of the US CBDC. The particular official answered that the institution is not yet a hundred percent sure whether or not they should indeed push forward on the deployment of such a digital currency.