In the recent past, there has been debate on whether or not the US Federal Reserve should develop and issue its own virtual currency. Now, one conservative think tank, Heritage Foundation, has voiced its opinion on the matter saying that the Fed does not need to launch its own digital currency to protect the citizens, Cointelegraph reports.
Heritage Foundation published its commentary piece on Feb. 12 noting that the controversial Facebook-led Libra stablecoin project which has faced numerous setbacks should serve as a reminder that issuance of currency does not need to remain centralized as a government function.
The commentary report says that the civil sector must make sure that sovereign monies remain the core aspect of a country’s financial system. The report reads:
“Government officials should not suppress alternative forms of money to protect sovereign currencies; they should protect people’s ability to decide what forms of money are the best means of payment.”
The report argues that consumer sovereignty should be a key principle rather than monetary sovereignty as Lael Brainard imitated in February. The think tank also highlights one of the major issues that has been cited by different groups, that crypto and stablecoins have been used to commit crimes and frauds. In this regard, Heritage foundation states that it is not necessary for the Fed to come up with its own digital currency to safeguard the citizens from the said problems.
The conservative think tank says that just like the government has been successive in policing the current payments system, it can also come with ways to regulate crypto- based systems against illicit activities, fraud as well as fraud.
The Heritage Foundation also says that the Fed should avoid competing with private enterprises. The report says that the introduction of CBDC will make the Fed compete with private financial institutions. Introduction of CBDC will mean that everyone can have an account with the Fed setting the central bank in collision with private banks for clients. Such a move might lead to the death of private banks.