Neel Kashkari, the President of the Federal Reserve Bank of Minneapolis (FED), noted during the annual conference of the Journal of Financial Regulation at Columbia Law School in New York held in August that the Central Bank Digital Currency (CBDC) is fundamentally about financial control, possibly due to the fact that it could potentially establish a direct link between government and the public’s financial activities.
Central bank digital currency is a digital token issued by the central bank and is similar to cryptocurrencies. They are pegged to the worth of that country’s fiat currency, despite the numerous benefits CBDC offers, including a more effective payment system, faster cross-border payments, environmental sustainability, and a platform for innovation.
It seems that more and more people are becoming aware of the cost of CBDC implantation and are now moving away from the idea, although certain government officials in the United States continue to push for it.
During the conference at Columbia Law School, the FED President expressed his skepticism about the adoption of digital currencies, noting that current financial solutions and the digital form of money are sufficient for conducting financial transactions.
Citing China, the only major economy to have already adopted a CBDC, he noted that the CBDC implementation gives the government more control over financial activities and explained that it might allow for close monitoring of financial activities, direct taxation, and the implementation of negative interest , meaning CBDC can be used as a surveillance tool.
Furthermore, while CBDC may be identical to digital money currently available and potentially offer more benefits, many see its adoption as an end to the little financial privacy that still exists in various countries. Nicholas Anthony, a policy analyst at the Cato Institute’s Center for Monetary and Financial Alternatives said:
While financial institutions do not track down the journey of each dollar bill in the ordinary course of business, a CBDC would likely have a record of its transactions and make that data available to financial institutions.