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Despite the mangled headline (only a "central bank" can issue *central bank* digital currency (CBDC)) this Cato survey contains some interesting statistical nuggets. It found that, while only 16% of Americans polled support a digital dollar, 49% haven't even formed an opinion (34% oppose it). A majority opposes a digital dollar that would allow the government to monitor their spending (68%) or control how they spend (74%). On fears that the government could potentially do either of these things, 76% of those polled said that the government should forbid the Fed from issuing a digital dollar. There are interesting differences between CBDC opinions of those who identify as Republicans (right leaning) and Democrats (left leaning) with the former being more wary of CBDC across all of the permutations and combinations of questions.

The Cato Institute analyzed responses to the Federal Reserve consultation on central bank digital currency (CBDC) and found that 66.52% of the 2,052 comments rejected a digital dollar. By excluding blank comments or those soliciting work on the project, the figure rises to 71.21%, with 11.74% in support of a CBDC, and 17.06% neutral. The most common concerns were over financial privacy, financial oppression, and the risk of disintermediating the banking system.

The Cato Institute published an article calling for the Federal Reserve to share more information regarding where it stands with respect to central bank digital currency (CBDC). The article recommends that the Fed come clean on the specific criteria that would influence it to make an official decision on whether it would or would not recommend launching a digital dollar. The article also calls on the Fed to come clean on whether it believes it has the authority to issue an intermediated CBDC, given that the Federal Reserve Act does not authorize direct Fed accounts for individuals, but may allow for an intermediated one. Also, it would be useful to know whether the Fed believes it has the authority to issue a distributed ledger technology (DLT) based wholesale CBDC, given that it already "issues" centralized ledger technology-based wholesale CBDC (e.g., commercial bank reserve accounts).

Trump Fed nominee Judy Shelton: "An approach that permits the issuance of virtual currencies in tandem with government-issued currencies, adapting legal tender laws to permit healthy currency competition-should be put forward."

For fans of "straw man" arguments, the Cato Institute published a digital dollar takedown. Most of the report is actually quite good, and I agree with most of the things the authors say about the dubious case for a US Fed-issued central bank digital currency (CBDC). But starting on page 7, they go down the privacy/control rabbit hole by assuming that a digital dollar will be designed as a control/surveillance coin, completely ignoring the possibility that it could be designed to offer the same privacy and user control as physical cash (see my IMF F&D article). Rather than completely diss CBDC, they could have made their paper a call for action to insist that at least one layer of the digital dollar offer complete offline usability and privacy, or lend support to the ECash Act.

The Human Rights Foundation (HRF) has launched a portal dedicated to tracking the development of central bank digital currencies (CBDCs) and how they relate to violations of civil liberties and human rights. It came out of an eight-month fellowship at the HRF announced in January 2023 and awarded to Cato Institute policy analyst Nick Anthony, researcher Janine Romer and podcaster Matthew Mezinskis. It is expected to become fully functional in November 2023, but it has launched a tip line and has published educational material. https://cbdchumanrights.org

An urgent priority for the Fed and other central banks is to move ahead with the provision of digital cash as a means of mitigating the effective lower bound. This approach will ensure that monetary policy will be systematic, transparent, and effective during normal times and in responding to severe adverse shocks.

"Several members of Congress have introduced legislation in response to the concerns that have been voiced over central bank digital currency, or CBDC. To help keep everyone up to speed, the table and paragraphs below offer an overview of the bills that have been introduced during the 118th Congress."

The North Carolina (NC) House of Representatives and the Florida House of Representatives and Senate approved anti-central bank digital currency (CBDC) legislation.  The NC legislation prohibits individuals from using CBDCs for any payments to the state, and bars the Federal Reserve from using NC as a potential CBDC pilot testing ground. The Florida legislation excludes CBDC from the definition of "money" for purposes of the Uniform Commercial Code (UCC). The Cato Institute's Nicholas Anthony has written a nice explainer on the impact of the UCC on digital currency in general, and the Uniform Law Commission has published a paper that covers the CBDC impact specifically.

Introducing a CBDC risks destabilizing the banking system and worsening panics. The Federal Reserve tried to lessen that risk by "including" banks in the process by proposing an intermediated CBDC. Yet, with an intermediated CBDC, banks would have to cover regulatory and overhead costs to maintain CBDC accounts even though they would have no loan revenue from those funds since the CBDC is still a liability of the central bank. Moreover, shrinking the supply of deposits would likely lead to costlier credit. That means loans will be more expensive for everyone.

"If Congress wants to make positive changes for the dollar, it should look to strengthening financial privacy, promoting currency competition, and creating a freer financial system."

"I agree wholeheartedly with the Board's aim of having "the Reserve Banks apply a consistent set of guidelines when reviewing such access requests…to facilitate equitable treatment across institutions," and I believe that the proposed guidelines represent an important step toward this end. However, I also believe that the guidelines can be made more conducive than they are at present to encouraging beneficial financial innovations, and that this can be done without increasing the risk of financial instability and without complicating the conduct of monetary policy."

"Before addressing how the Postal Service might be justifying its authority to launch the pilot program, it's helpful to consider what exactly is taking place. The pilot program only operates in four locations across four cities, and it offers a rather roundabout form of check cashing. Instead of receiving cash directly, customers can exchange a business or payroll check up to $500 for a single‐​use gift card after paying a flat fee of $5.95. This design may appear odd, but it was chosen quite carefully. Instead of "cashing checks," the Postal Service is "selling gift cards.""

"A CBDC poses substantial risks to financial privacy, financial freedom, free markets, and cybersecurity. Yet the purported benefits fail to stand up to scrutiny. There is no reason for the U.S. government to issue a CBDC when the costs are so high and the benefits so low."

"Changes to the Uniform Commercial Code (UCC) are not usually headline news, but recent changes around the UCC's definition of money have been catching attention across the country. Concerns have erupted around the idea that states are quietly banning Bitcoin and paving the way for central bank digital currencies (CBDCs)."

"The Right to Financial Privacy Act, originally enacted in 1978 in response to how the Bank Secrecy Act and the third‐​party doctrine weakened the protections of the Fourth Amendment to the U.S. Constitution, has already set a foundation for some of the protections needed today. However, it is largely due to a long list of exceptions in the Right to Financial Privacy Act that much of the financial surveillance over the past 50 years has been permitted to expand-hidden away from the public eye."

The Human Rights Foundation (HRF) launched a central bank digital currency (CBDC) tracker that focuses on civil liberties and human rights impacts. of people living under authoritarian regimes. According to tracker, central banks in 119 countries are currently researching, piloting, or deploying CBDCs, and the HRF estimates that 3.7 billion people (46% of the world population) are living under autocracies currently experimenting with CBDCs. The coverage is similar to that provided by the Atlantic Council's CBDC tracker, and similarly double counts currency zone countries to pump up the numbers, which the crowd-sourced CBDCTracker.org does not do.

"Originally, $6,000,000 was allocated for a new postal banking pilot program despite last year's test of the program only reaching 6 people. The spending was spelled out in an appropriations bill that called for a new pilot program that would feature surcharge‐​free ATMs, wire transfers, check cashing, and bill payment services at five rural and five non‐​rural United States Postal Service (USPS) locations. In other words, it would have doubled the footprint of last year's failed attempt to introduce postal banking."

"The narrow stablecoin alternative is a middle course: instead of having the Fed enter the retail CBDC business, it would have it offer its wholesale accounts and services to a broad set of retail digital currency or stablecoin providers-and not just to insured banks and thrifts."

"Although FedNow is not a CBDC, that's not to say there is no reason to object to it. Faster payments are needed in the United States, but FedNow is not the only option. FedNow was announced in 2019, but that was two years after the Clearing House (TCH) introduced the Real‐​Time Payments (RTP) Network. In fact, while not offering instant payments, even just expanding the operating hours of Fedwire and the National Settlement Service (NSS) to run 24x7x365 would have improved the U.S. financial system. Yet, the Federal Reserve seems to have chosen to ignore the simpler option and walk over the private sector. Both choices are grounds for fair and longstanding objections to FedNow."