That direct, digital liability—a sort of digital tether between citizens and the central bank—makes CBDCs a radical departure from the digital dollars millions of Americans already use today.

While a CBDC would not offer any unique benefits to Americans compared to existing technologies, it would pose
serious risks.

For example, a CBDC could spell doom for what little financial privacy protections remain.

Put simply, a CBDC would most likely be the single largest assault to financial privacy since the creation of the Bank Secrecy Act and the establishment of the third‐​party doctrine.

The threat to freedom that a CBDC could pose is closely related to its threat to privacy.

With so much data in hand, a CBDC would provide
countless opportunities
for the government to control citizens’ financial activity.

A CBDC could undermine both the foundation and future of financial markets by reducing credit availability, disintermediating banks, and challenging the rise of cryptocurrency.

“A CBDC would be one of the tools to fight crypto.”

Juda Agung, Assistant Governor at the Central Bank of Indonesia
Image: InfoP​ub​lik​.id

In short,

a CBDC would fail to offer the benefits its proponents suggest…

Congress should prohibit the Fed and Treasury from issuing a digital national currency.

CBDCs have no place in the American economy.

It’s due to these fundamental threats to the American economy that policy analysts, industry representatives, and even government officials themselves are pushing back against CBDCs.

“We would not want a world in which the government sees, in real time, every money transfer that anyone makes with a CBDC.”

Federal Reserve Chair Jerome Powell

“In other words, those calling for the rollout of a CBDC are naïve to believe that this can be done without establishing a centralized surveillance system for all financial transacting.

Quite simply, even if such surveillance is not included in the [initial] design, it would be trivial to add it at a later stage. Once a door to surveillance is opened, it is virtually impossible to close.”

Natalie Smolenski, Bitcoin Policy Institute

“America has plenty of digital currency. Every swipe you make, you’re transacting in digital currency. Adding a new form of digital currency from the central bank does little to change the fundamental issues facing lower‐​income Americans.”

Aaron Klein, Brookings Institution

“Without doubt, a CBDC could have sinister consequences for the U.S. should the government gain granular insight into Americans’ everyday transactions, potentially directing them to favored public policies.”

Paul Jossey, Competitive Enterprise Institute

“At some point, a CBDC that fails to provide a high degree of financial privacy will be used to monitor and censor the transactions of one’s political enemies. It is foolish to think otherwise.”

William Luther, American Institute for Economic Research

“In authoritarian societies, central bank money in digital form could become an additional instrument of government control over citizens rather than just a convenient, safe, and stable medium of exchange.”

Eswar Prasad, Cornell

“In a fully implemented CBDC system, governments could financially exclude individuals or entire groups of people with the press of a button, leaving them with nothing. Governments like the CCP could target dissidents, sexual minorities, ethnic minorities, or religious minorities. If banknotes don’t exist and access to government‐​issued digital cash is revoked, then they are truly helpless.”

Alex Gladstein, Human Rights Foundation

“A central bank digital currency is not simply paper currency in digital form: its adoption would have profound consequences for the U.S. financial system and economy.”

Gregory Baer, Bank Policy Institute

“While there are no doubt opportunities for improvement, we believe most, if not all, [of these opportunities] can be addressed by innovations in the current financial services framework and through continued public‐​private partnerships, without the introduction of a novel digital currency that could destabilize the system.”

Madison Rose, Credit Union National Association

“Contrary to popular belief, a U.S. CBDC is not necessary to ‘digitize the dollar,’ as the dollar is largely digital today. However, the issuance of a CBDC would fundamentally rewire our banking and financial system by changing the relationship between citizens and the Federal Reserve.”

Rob Morgan, American Bankers Association

“[The] creation of a CBDC will introduce significant privacy and cybersecurity risks into the nation’s monetary system and disrupt the stability of America’s banking system.”

Deborah Matthews Phillips, ICBA

“With a CBDC, central banks would have a backdoor directly into your bank account, as well as the means to monitor every digital transaction made.”

Dante Disparte, Circle

“CBDCs are a nightmare for civil liberties. They put governments at the center of every transaction, giving governments visibility into financial transactions and the ability to revoke money. This is the exact opposite of the purpose of cryptocurrency technology.”

Marta Belcher, Filecoin Foundation

“Not only would this CBDC model centralize Americans’ financial information, leaving it vulnerable to attack, but it could also be used as a surveillance tool that Americans should never tolerate from their own government.”

Representative Tom Emmer (R‑MN)

“[Private stablecoin issuers have the same] parochial objection that the banks do. They see CBDCs—and I think rightly so—as a potential threat.”

Representative Jim Himes (D‑CT)

“A CBDC would allow the government to spy on us. Congress needs to [stop] the Fed from developing a CBDC now!”

Senator Ted Cruz (R‑TX)

“A centrally managed, centrally controlled, Central Bank Digital Currency (CBDC) is a tool for coercion and control.”

Representative Warren Davidson (R‑OH)

“Republicans have consistently said the benefits of a potential U.S. CBDC must outweigh the risks—these reports fail to make the case. The Biden Administration has not adequately identified what problems a CBDC would solve or whether private sector payment solutions could provide a better alternative.”

Representative Patrick McHenry (R‑NC)

“The prospect of government surveillance of Americans’ individual financial transactions through a CBDC and Fed accounts raises serious privacy concerns, not to mention concerns about government control and politicization of loans, online payments, credit scores, tax compliance, federal contracts, monetary policy and the like.”

Representative Andy Barr (R‑KY)

“I’m hard pressed to think how a private bank would have a specific incentive to take CBDC deposits. […] I can’t see [lending and deposits] existing in a CBDC system.”

Representative Sean Casten (D‑IL)

“My principal concern with the domestic use case [of a CBDC] is the blurring of the line between monetary and fiscal policy.”

Representative Jake Auchincloss (D‑MA)

“A digital U.S. currency would be one of the most dangerous developments in history. When government can simply flip a switch to block all your transactions, it controls your entire life. We need a wall of separation between money and state.”

Former Representative Justin Amash (L‑MI)

“As I have said before, the introduction of a U.S. CBDC would come with a number of costs and risks, including cyber risk and the threat of disintermediating commercial banks, both of which could harm, rather than help, the U.S. dollar’s standing internationally.”

Federal Reserve Governor Christopher Waller

“I can see why China would do it. If they want to monitor every one of your transactions, you could do that with a central bank digital currency. You can’t do that with Venmo. If you want to impose negative interest rates, you could do that with a central bank digital currency. You can’t do that with Venmo. And if you want to directly tax customer accounts, you could do that with a central bank digital currency. You can’t do that with Venmo.

I get why China would be interested. Why would the American people be for that?”

Federal Reserve Bank of Minneapolis President Neel Kashkari

“Finally, there is no compelling demonstrated need for a Fed‐​issued digital currency. Most consumers and businesses in the U.S. already make retail payments electronically using debit and credit cards, payment applications, and the automated clearinghouse network. Moreover, people are finding easy ways to make digital payments directly to other people through a variety of mobile apps.”

Federal Reserve Vice Chair for Supervision Lael Brainard

“In brief, the potential benefits of a Federal Reserve CBDC are unclear. Conversely, a Federal Reserve CBDC could pose significant and concrete risks.”

Former Federal Reserve Vice Chair Randal Quarles

“We haven’t made a decision to issue [a CBDC] yet because we basically don’t see a compelling need under current circumstances.”

Bank of Canada Deputy Governor Timothy Lane

“CBDCs would give the government virtually complete control over the monetary system… but from an individual’s perspective, a CBDC would be a historic blow to privacy and individual liberty.”

Joseph Wang, Former Federal Reserve Trader