As the federal government advances its plans to create a central bank digital currency (CBDC), critics are sounding the alarm about how much power a digital dollar would place in the hands of federal agencies.
The latest step toward a CBDC, called “Project Cedar,” was launched by the Federal Reserve Bank of New York last month as a “wholesale” digital dollar for cross-border payments that is only available to banks and corporations. This effort, barely noticed amid the headlines surrounding the scandalous collapse of crypto-currency exchange FTX, follows Project Hamilton, a retail CBDC beta test conducted last February by the Boston Fed in collaboration with the Massachusetts Institute of Technology’s Digital Currency Initiative.
The Fed lauded the success of its latest digital dollar venture, stating: “Project Cedar showed that blockchain-enabled cross-border payments can be faster, simultaneous, and safer.” But critics of the Fed’s CBDC initiatives were less enthusiastic.
“The launch of 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,” Nicholas Anthony, a policy analyst at the Cato Institute, told The Epoch Times. By contrast to the U.S. dollar in its current form—cash and bank deposits—a CBDC would be issued directly by the federal government, giving it potentially unlimited access to and control over Americans’ money.
“At its core, financial privacy is important because this information can reveal a person’s relationships, profession, religion, political leanings, locations, and so much more,” Anthony said. “And while cash offers the greatest privacy protection for Americans, banks too offer a sort of air gap that protects Americans from prying eyes. Read more…