SEC Official Opposes Central Bank Digital Currency: Security Risks Too High7. July 2023
• Former SEC official John Reed Stark expresses his disapproval of the proposed central bank digital currency (CBDC), citing multiple privacy and security concerns.
• Stark also supports Senator Ted Cruz’s proposed legislation to ban the Federal Reserve from creating a direct-to-consumer CBDC.
• He believes that any potential benefits of having a CBDC are not worth the associated costs and challenges.
SEC Official Expresses Disapproval of Central Bank Digital Currency
A former official of the U.S. Securities and Exchange Commission (SEC) has expressed his disapproval of the proposed central bank digital currency (CBDC). Ex-chief of the SEC Office of Internet Enforcement John Reed Stark says that establishing a CBDC will bring about unnecessary risks relating to global financial systemic stability, as well as open a Pandora’s box of global financial privacy problems, conflicts, and cybersecurity concerns.
Stark Supports Proposed Ban on CBDC
Stark is in support of Senator Ted Cruz’s proposed legislation that seeks to prohibit the Federal Reserve from creating a direct-to-consumer CBDC. According to Cruz, the digital dollar could be used as a financial surveillance tool by the government. For this reason, Stark believes it is necessary for this bad idea to be stopped dead in its tracks before it is too late.
Challenges Associated with CBDC
The establishment of a CBDC does not solve any problem since trusted digital currencies regulated by government authorities and US-registered financial institutions already exist. What it would do is give rise to policy issues such as how it might affect market structure, credit availability, safety & stability, and monetary policy efficacy. Moreover, there are numerous associated costs and challenges which make having a CBDC not worth it at all according to Reed Stark.
CBDC vs FIAT Money
Reed stark compares setting up a CIBC with building an unnecessary bridge in the middle of nowhere under false pretenses — claiming it will be beneficial for society when in fact it will cause more harm than good. On top of this, he believes that cashless fiat money still has advantages over cryptocurrencies or other types of virtual money like CBDCs due to their higher level of trustworthiness in comparison with decentralized currencies like Bitcoin or Ethereum which can be easily manipulated by malicious actors without sufficient regulations or controls from government authorities or banking institutions .
In conclusion, while there are some potential benefits associated with implementing central bank digital currencies (CBDCs), these benefits may not outweigh associated risks such as those related to global financial system stability or privacy concerns stemming from their use as surveillance tools by governments around world . Consequently , former SEC Office chief John Reed Stark supports Senator Ted Cruz’s proposed legislation which seeks to prohibit the Federal Reserve from creating such digital currencies .