Ex-SEC Official Deems CBDCs “Most Absurd” in Financial History

Ex-SEC Official Deems CBDCs “Most Absurd” in Financial History

Time Stamp: July 4, 2023 1:50 PM
Source Node: 2748895
  • Ex-SEC official John Reed Stark argued that CBDCs are an absurd financial idea.
  • Stark believes CBDCs actually solve nothing.
  • Stark’s statement is in stark contrast to Gary Gensler’s endorsement of CBDCs.

Former SEC official and long-time crypto critic John Reed Stark argued that the creation of a Central Bank Digital Currency (CBDC) stands as one of the most preposterous ideas in the history of monetary policy. 

Stark begins by challenging the fundamental premise behind a CBDC, posing the crucial question of what problem it actually solves. To date, no compelling answer has been put forth.

Stark emphasizes that a range of digital currencies already exists, which function remarkably well and are trusted due to their regulation, auditing, and oversight by democratic government authorities. These currencies are operated by reputable, US-registered financial institutions that are insured and compliant with regulatory standards such as the FDIC or SIPC.

What truly perturbs Stark is the distortion of the term “innovation” when applied to cryptocurrencies. While some politicians champion the virtues of crypto, they turn a blind eye to its detrimental externalities and fail to recognize that it lacks true innovation.

Moreover, the risks associated with a CBDC are plentiful and give rise to critical policy concerns. These encompass potential impacts on market structure within the financial sector, credit accessibility and affordability, the safety and stability of the financial system, and the effectiveness of monetary policy.

In addition to exposing the global financial system to unnecessary risks, a CBDC opens up a Pandora’s box of issues relating to financial privacy, conflicts, and cybersecurity.

Given the significant challenges and unanswered questions surrounding CBDCs, Stark’s skepticism regarding their creation is well-founded, according to replies by the crypto community.

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