The Libertarian think tank, the Cato Institute, analyzed responses to the Federal Reserve consultation on central bank digital currency (CBDC) and found that two thirds of the comments rejected a digital dollar. By excluding blank comments or those soliciting work on the project, the figure rises to just over seventy percent.
“The most common concerns were over financial privacy, financial oppression, and the risk of disintermediating the banking system,” says a blog post.
That’s not to say the balance was all positive. In fact, only 11.74% were in support of a CBDC, and 17% were neutral.
Another issue is whether these responses are representative. The European Central Bank (ECB) also conducted a CBDC consultation. Its results showed that a massive 47% of responses were from Germany and 87% of respondents were male.
Consistent with its Libertarian stance, the Cato Institute is none too supportive of CBDC. The research article considers CBDC ‘A Solution in Search of a Problem’. We found one mildly supportive article last year from David Andolfato, who works for the St Louis Fed. But this year, Cato blog posts include ‘CBDCs Are about Control — They Should Be Stopped‘ and ‘Central Bank Digital Currencies and Freedom Are Incompatible‘.
Returning to the consultation responses, the research found that a reasonable proportion of businesses were supportive of a digital dollar. This was dismissed as companies with Fed relationships and those seeking work now or in the future. It also noted that many banking-related organizations are none too keen, as we previously reported in depth. The American Bankers Association voiced concerns long before the consultation.
One point we’d like to refute in the Cato blog post is an observation that “China has now had a CBDC available for some time, but we have yet to see the world flock to it.” That’s because the digital yuan is still in pilot mode, and the first step is domestic deployment. It’s already participating in cross border trials. It remains to be seen whether CBDCs will prove to be popular.