卡托研究所-央行数字货币：评估风险并消除误解（英）-2022.11

alCurrencyAssessingtheRisksandDispellingtheMythsandNorbertMichelNovember18,2022KINGPAPERNo.70atoWorkingPapersareintendedtocirculateresearchinprogressforcommentanddiscussion.Availableat/workingpapersCentralBankDigitalCurrency:AssessingtheRisksandDispellingtheMythsNicholasAnthonyandNorbertMichel1November2022CentralbankdigitalcurrenciesorCBDCshavethepotentialtoradicallytransformtheAmericanfinancialsystem.Theyarenolongermerelyacademicmusings.Rather,CBDCshavegainedtheattentionofpoliticians,centralbankers,thetechindustry,andeventhebroaderpublic.1Governmentofficials,intheUnitedStatesandabroad,arenowactivelyworkingtoimplementCBDCsandsolidifygovernmentcontroloverpaymentssystems.2ButthisexperimentshouldbeleftonthedrawingboardbecauseCBDCsultimatelyusurptheprivatesectorandendangerAmericans’corefreedoms.TheyhavenoplaceintheAmericaneconomy.CongressshouldexplicitlyprohibittheFederalReserve(theFed)andtheDepartmentoftheTreasury(Treasury)fromissuingaCBDCinanyform.atisaCBDCACBDCisadigitalnationalcurrency.InthecaseoftheUnitedStates,aCBDCwouldbeadigitalformoftheU.S.dollar.Likepaperdollars,aCBDCwouldbealiabilityoftheFederalReserve.Butunlikepaperdollars,aCBDCwouldofferneithertheprivacyprotectionsnorthefinalitythatcashprovides.Infact,it’spreciselythisdigitalliability—asortofdigitaltetherbetweencitizensandthecentralbank—thatmakesCBDCsdistinctlydifferentfromthedigitaldollarsmillionsofAmericansalreadyuse.heprivatesectortodayAmericansregularlyusemultipleformsofdigitaldollars.Theysenddigitalpaymentsusingcreditcards,debitcards,prepaidcards,andseveralmobileapplicationse.g.,Zelle,PayPal,orCashApp).Infact,it’snotjustpaymentsthathavegonedigital.Nearlyeveryfinancialinstitutionoffersservices—avingsaccountstomortgagesviamobileapplicationsSo,thereshouldbenomisunderstandingtheU.S.dollarisalreadywidelyavailableindigitalform.Moreover,thecurrentsystemworkssowellthatfewpeopleevertakethetimetoworryoverwhetherthedigitaldollarstheyareusingarealiabilityofVisaoraliabilityofBankofAmerica.ughconsumershavelittlereasontothinkaboutit,whentheyuseaprepaidcard,thebalanceonthecardisaliabilityoftheprivatecompanythatissuedit(e.g.,Visa,Mastercardetc.).Similarly,whenaconsumerdepositsmoneyintohisorherbankaccountthedepositinthataccountisaliabilityofthebank(e.g.,Chase,CapitalOne,etc.).Inpractice,thatmeansthatthebankowesthecustomerthefundsdepositedinthataccount.Whenaconsumertransfersmoneyfromabankaccount,thebankisresponsiblefortransferringthemoney.1NicholasAnthonyisapolicyanalystattheCatoInstitute’sCenterforMonetaryandFinancialAlternatives.NorbertMichelisvicepresidentanddirectoroftheCenterforMonetaryandFinancialAlternatives.InthecaseofaCBDChoweverthedigitaldollarswouldbealiabilityofthecentralbankitself.Thatis,thegovernmentinthecaseoftheUnitedStates,theFederalReserve3—hasthedirectresponsibilitytohold,transfer,orotherwiseremitthosefundstotheostensibleowner.Thisfeaturecreatesadirectlinkbetweencitizensandthecentralbank—aradicaldeparturefromtheexistingAmericansystemwhereprivatefinancialinstitutionsprovidebankingservicestoretailconsumers.erhapsbecausethisdepartureissoradical,someCBDCproponentspromotean“intermediatedCBDC,”whereprivatefinancialinstitutionswould“service”theaccount.4Inthisarrangement,thebalanceontheaccountremainsontheFed’sbalancesheet(i.e.,aliabilityoftheFed).However,aprivatefinancialinstitutionwouldprovideallnecessaryretailbankingservices(e.g.,transferringfunds,handlingcomplaints,etc.).Mostofthepolicyimplicationsarethesameforintermediatedandnon-intermediatedretailCBDCs.CBDCWhatisitProponentsclaimthataU.S.CBDCwouldpromotefinancialinclusion,spurfasterpayments,protecttheU.S.dollars’statusastheworld’sreservecurrency,andmakeiteasiertoimplementmonetary(orfiscal)policy.5Yet,asthisbriefdemonstratesallfourargumentsfailtostanduptoscrutiny.lusionManyCBDCproponentsclaimthatCBDCswouldimprovefinancialinclusionbyprovidinganewsourceoffinancialservicesforAmerica’sunderbankedandunbankedpopulations.Butmuchlikeproponentsofothermisguidedproposalstoimprovefinancialinclusion,6CBDCproponentsignoretheinnovationsalreadytakingplaceintheprivatesectoraswellaswhattheunbankedwant.alDepositInsuranceCorporations(FDIC’s)surveyoftheunderbankedandunbankedhouseholdsinAmericarevealsthattheissueoffinancialinclusionismorenuancedthansolelybeingaquestionof“access.”7Over72%oftheunbankedhouseholdssurveyedsaidthattheywerenotinterestedinhavingabankaccount(Figure1).8Whenaskedwhytheyfeelthisway,respondentsmostcommonlysaidthattheylackenoughmoneytoopenanaccount,avoidthebankingsystemtosecuretheirprivacy,andhaveadistrustforbanksingeneral(Figure2).9nthataCBDCwouldestablishadirectlinebetweenconsumersandthefederalgovernmentthesamegovernmentresponsiblefortheknowyourcustomerKYCregulationsthatrequirecitizenstoprovidepersonalinformationtobanks,itisunlikelythataCBDCwillallaycitizens’privacyconcerns—especiallygiventhatthepublicstrustfortheU.S.governmentisathistoriclows(Figure3).10Infact,unlessaCBDCoperateswithoutthesameanti-moneylaunderingAMLandKYCrequirementsasbanks,mostunbankedAmericanswouldlikelyavoidaCBDC.extentthatconsumersremainunbankedbecausetheydonothaveenoughmoneyCBDCproponentshavebeentooquicktoignorerecentcost-reducinginnovationswithintheprivatesector.11Forinstanceasonlineandmobilebankingoptionshaveproliferated—largelyeliminatingconcernsofinconvenienthoursandlocations—unbankedhouseholdsintheUnitedStateshavesteadilydecreased,fallingfrom8.2percentin2011to4.5percentin2021(Figure4).12BythetimeaCBDCisreleased(whichisestimatedtotakeupwardof5to10years),thatnumbermightbeevenlower.13Regardless,thegoaloffinancialinclusionshouldnotbetoforcepeopletohavebankaccounts.Ratherthanrestrictingaccesstothemarkettoprotectlegacyfinancialinstitutionspolicymakersshouldestablishalegalframeworkthatfostersmorecompetition,diversificationofrisksandconsumerchoiceinthefinancialsector.yCBDCproponentslikewiseclaimthataCBDCcouldofferfasterpaymentsoptions.ImprovingsettlementspeedsofthepaymentssystemintheUnitedStatesisindeedanobleeffort,14andothercountrieshavedonemoretoimplementrealtimepaymentssystems.(Figure5).15Still,aCBDCwouldfailtoprovideaunique,orevenadditional,benefitcomparedtotheexistingdevelopmentsintheprivatesector.InaconsortiumofprivatebanksfinallyputtheUnitedStatesonthemapwiththelaunchoftheRealTimePayments(RTP)Network,offeringinstantsettlementsforpaymentsacrossthecountry.16However,theRTPNetworkhasyettoreachitsfullpotentiallargelybecausetheFedinterruptedtheRTPNetwork’sprogresswiththesuddenannouncementthatittoowouldlaunchaninstantsettlementnetwork(knownasFedNow)in2023.17Nowthatstablecoinsofferanotherprivate-sectorsolutiontopaymentdelaysbymakingtransactionspossible24hoursaday,itseemssomearekeenonrepeatinghistorybyhavingtheFedinterruptthisprogresswiththelaunchofaCBDC.18Withtheseadvancesinmind,itshouldbeevidentwhysomegovernmentofficialshavebeenwearyofCBDCs.Forinstance,ReserveBankofAustraliaGovernorPhilipLowesaid“Todate,though,wehavenotseenastrongpublicpolicycasetomove[towardaCBDC],especiallygivenAustraliasefficientfastandconvenientelectronicpaymentssystem.”19EvenintheUnitedStatesFederalReserveernorMichellBowmansaidMyctationisthatFedNowaddressesthesthatsomehaveraisedabouttheneedforaCBDC.”20Inotherwords,aCBDCrsnouniquesettlementadvantagetostingalternativesmanyofwhichalreadyferinstantornearlyinstantsettlementspeeds.orldReserveCurrencyponentsalsoclaimthatpreservingthedollar’sstatusastheworld’sreservecurrencyisapotentialbenefitofaCBDC,butthisclaimalsofallsshort.Thedollar’srenownedstatusisowedtothestrengthoftheAmericaneconomyanditslegalprotectionsforprivatecitizensrelativetomostothercountriesnotthespecifictechnologyenablingelectronictransfers.21Congressshouldfocusonimprovingthoseunderlyingreasonsnotthelatestcrazeincentralbanking—ifitseekstostrengthentheroleofthedollar.Forinstance,creatingstrongerfinancialprivacyprotections,removinggovernmentroadblockstofasterpaymentsspeeds,andrequiringbettertransparencyinmonetarygovernancewouldlikelybenefitthedollar’sinternationalstatus.NoneofthesestepsinvolveissuingaCBDC.22“Goingdigital”maybeanimprovementforsomeforeigncurrencies,butthosecurrenciesstillhavemanyotherproblemsthatpreventthemfrombeingusedonaninternationalscaleMoreover,oneoftheeasonsthatcryptocurrencieshavebecomesopopularisthattheyhavebecomeanimportantalternativeforcitizensinmanyforeigncountrieswhosepaymentsystemsareweakandunreliablecomparedtotheUS.system.TheU.S.dollarisinnodangeroflosingitsstatussimplybecausetheFeddoesnothaveaCBDC,especiallyifthecountrieslaunchingCBDCsofferfewoftheeconomicandlegalprotectionsintegraltotheU.S.system.ForexampleChinasCBDC(thee-CNY)isunlikelytoattractglobaldemandconsideringtheChinesegovernment’slonghistoryofviolatingpropertyrights,financialprivacy,andotherhumanrights.23Likewise,Nigeria’sCBDC(theeNaira)isunlikelytoattractglobaldemandgivenNigeria’svolatileinflationandtumultuoushistory.24Andfinally,theBahamas’sCBDC(theSandDollar)isunlikelytoattractglobaldemandbecausetheBahamiandollarhasneitherawideenoughnetworknorstrongenougheconomytobecomeaninternationalreservecurrency.So,whereeachcountryfacesauniquechallengetogainingworldreservestatus,aCBDCsolvesnothing.PolicyFinallyproponentsalsoarguethataCBDCcouldimprovetheimplementationofmonetaryandfiscalpolicy.Ostensibly,CBDCswouldoffertheopportunitytofinetunetheeconomyattheindividuallevel,openthedoorforchargingnegativeinterestrates,andremovecreditandliquidityrisksfromthemarket.Allthreeclaimsaremisguided.hesuggestionthataCBDCcouldallowpolicymakersandregulatorstofinetunetheeconomyisassanguineasitisconcerning.Whetheritwasthe1970sorthe2010s,itisnosecretthattheFedhaslongstruggledtoreachitspolicytargets.Infact,giventheFed’spoortrackrecordofmanagingthepricelevelandbusinesscycles,itismorethanplausiblethattheFedhasworsenedoverallstability.25Nonetheless,someargue7thatbytrackingthefinancialactivityofndividualAmericanstheFedcouldfinallysteertheeconomy.rinstancesomeCBDCproponentsarguethattheuseofnegativeinterestratesisthetoolthat’sbeenmissingfromtheFed’sarsenal.WhileCBDCsmaybenew,negativeinterestrateproposalsarenot.Proponentshavelongcalledforbanningcashtoimplementnegativeinterestrates,andusingCBDCstoconductsuchapolicywouldlikelyrequireabanonallalternativesjustthesame(e.g.,cash,cryptocurrencies,foreigncurrencies,andthelike).26nallymanyproponentsarguethatCBDCscanattractmorecustomersthantheprivatesectorbecausetheyprovideanoptionwithzerocreditriskandzeroliquidityrisk,butthisdistinctionismisleading.ThetechnologybehindaCBDCprovidesnosuchbenefit.Thesezeroriskfeaturesarewhollyduetogovernmentguaranteeswhichofcourse,couldbeaddedtoanyprivatesectorelectronicpaymentionsPutdifferentlyifCongresswantstoensurethatcertainpaymentsareconductedwithzeroliquidityorcreditrisk,itcandosowithoutaCBDC.RisksthatCannotBeIgnoredhileaCBDCwouldnotofferanyuniquebenefitstoAmericanscomparedtoexistingtechnologies,itwouldposeseriousrisksInfactAmericanshavealreadynoticedthatCBDCsposeasubstantialthreattofinancialprivacy,financialfreedom,andtheveryfoundationofthebankingsystem.27Andit’stheseveryrisksthatwerecitedacrossovertwothirdsofthe2,015commentletterswrittentotheFedopposingitsplanforaCBDC(Figure7).28AmericanshavearighttoprivacythatisprotectedbytheU.S.Constitution,buttherighttofinancialprivacyhasbeenchippedawayfordecades.29Lawsdesignedtocounterterrorismdetermoneylaundering,andcollecttaxeslargelyprovidethegovernmentwiththeabilitytoconductuncheckedsurveillanceoverfinancialinformation.30Nonetheless,aCBDCcouldspelldoomforwhatlittleprotectionsremainbecauseitwouldgivethefederalgovernmentcompletevisibilityintoeveryfinancialtransactionbyestablishingadirectlinkbetweenthegovernmentandeachcitizens’financialactivity.31lythereexistsabufferbetweenthegovernmentandthepublic’sfinancialactivitybecausethatactivityisspreadacrossallthedifferentcommercialbanksandpaymentsservicesthatAmericansuse.Thegovernmentmaynotberequiredtogetawarranttoaccessmuchofthefinancialinformationhousedatthesedifferentbusinessesbuttrackingdownandworkingwiththesebusinessesaddsabuffer—albeitamarginalone.IfthegovernmentweretoprovideaCBDC,however,thatbufferwouldceasetoexist.Allfinancialdatawouldonlybeakeystrokeaway.Putsimply,CBDCwouldmostlikelybethesinglelargestassaulttofinancialprivacysincethecreationoftheBankSecrecyActandtheestablishmentofthethird-partydoctrine.32FreedomethreattofreedomthataCBDCmightposeiscloselyrelatedtoitsthreattoprivacyWithsomuchdatainhandandconsumerssocloselyconnectedtothecentralbank,aCBDCwouldprovidecountlessopportunitiesforthegovernmenttocontrolcitizens’financialtransactions.33Suchcontrolcouldcomeintheformofprohibitingandlimitingpurchases,spurringandcurbingpurchases,orfreezingandseizingfunds.TheprogramingcapabilitiesofaCBDCcouldmeanthatpeoplewouldbeprohibitedfrombuyingcertaingoodsorlimitedinhowmuchtheymightpurchase.Forexample,advocateshavequippedthatparentscouldprogramtheirchildren’slunchmoneywiththeconditionthatitcan’tbespentonsweets.34It’simportanttoconsidertheextendedpossibilitiesofsuchanoption.Likeparentstryingtocontroltheirchildren,policymakerscouldtrytocurbdrinkingbylimitingnightlyalcoholpurchasesorprohibitingpurchasesforpeoplewithalcoholrelatedoffenses.Inthecaseofthegovernmentmandatedlockdownsduringthepandemic,aCBDCcouldhavebeenprogrammedtoonlyexchangewith“essential”businessesoralerttheauthoritieswhencitizensincurredtravelexpenses.ThepossibilitiesfortheprogrammabilityofaCBDCarenearendless.Andinallofthem,eventhebestofintentionsarejustafewstepsawayfromleadingtoseriousabusesofpower.AsidefromthebasicprogrammabilitythataCBDCwouldofferforsocialandpoliticalcontrol,oneofitsmostcommonfeaturesistheabilitytopaybothpositiveandnegativeinterestratestocurbandspurpurchases.Thatis,thegovernmentproviderofaCBDCcaneasilyputmoneydirectlyintoacitizen’saccountand,justaseasily,takemoneyout.Ultimately,implementingsuchnegativeinterestratepenaltiesdependsontherebeingnoalternativepaymentmethodsforconsumers,whichisonereasonthatgovernmentsintroducingCBDCshavebeenbanningcryptocurrencies.Butit’snotjustthird-partycompetitorsthatwouldneedtoberemoved—centralbankerscannotimplementnegativerateswithCBDCsifpeoplecanstillswitchtocash(papercurrency).Infact,eliminatingcash(andothermonetaryalternatives)ispreciselywhatmanyCBDCproponentscallfor.35orebroadlygovernmentshavelongrecognizedthatfreezingsomeone’sfinancialresourcesisoneofthemosteffectivewaystolockthemoutofsociety.36Forexample,OperationChokepointwasaU.S.governmentoperationwhereofficialspressuredfinancialinstitutionstodenyservicestopoliticallydisfavoredbusinessesegpawnshops,checkcashers,cannabisdispensaries.Asoneofficialdescribedit,theoperationwasdesignedtostopthesebusinessesby“chokingthemofffromtheveryairtheyneedtosurvive.”37Internationallythisweaponizationofthefinancialsystemissuchacommonproblemthatmanypeoplehaveturnedtocryptocurrenciesasasolutiontooverzealousgovernmentsthattargetthefinancialaccountsofprotestorsandwhistleblowers.38ACBDCwouldstandindirectcontrasttothisnewalternative.39ThereisalsoariskthataCBDCcouldunderminetheveryfoundationoffinancialmarketsFederalReservevicechairLaelBrainardexplainedinaspeech:asuccessfulcentralbankdigitalncyweretobecomewidelyuseditcouldbecomeasubstitutetailbankingdepositsThisuldrestrictbanksabilitytomakeforproductiveeconomictiesandhavebroadermacroeconomicconsequences.oreovertheparallelcoexistencealbankdigitalcurrencywithretailbankingdepositscouldraisetheriskofrunsonthebankingsystemintimesofstressandsohaveadverseimplicationsforncialstabilityederalReserveresearchershavesinceattemptedtocalmthisfearbyarguingthataCBDCcouldofferhelpfulcompetitiontothebanksOnepaper,forinstance,providesamodelwhere“adeposit-likeCBDCwithaproperinterestratewouldencouragebankstopayhigherinteresttokeeptheircustomers”and,therefore,“wouldnotnecessarilycrowdoutprivatebanking.”41Whilethe“notnecessarily”caveatislikelytoproveunconvincingtomostprivatebanks,thecaveatattheendofthepaperdemonstratesthattheauthors’conclusionismorethanprecarious.Theconclusionstateshigh,disintermediationoccurs.”42tisthereforehardlysurprisingthatmajorbankingandcreditunionassociationsarepubliclyopposedtoCBDCs.43Similarly,thereisnodoubtthatCBDCsalsounderminetheefficacyofprivatecryptocurrencies(includingstablecoins),anewsourceofcompetitiontothelegacypaymentssystem.44Globally,nations’actionshavedemonstratedthattheywantaCBDCspecificallytoholdontotheirmonopolyovernationalcurrencies.Forinstance,Chinabannedcryptocurrenciesjustasit’sCBDCwaslaunched,IndiaannounceditsplansforaCBDCwhilesimultaneouslycallingforabanoncryptocurrency,andNigeriaprohibitedbanksfromcryptocurrencytransactionsjustasitlauncheditsCBDC.IntheUnitedStates,RepresentativeJesus“Chuy”Garcia(D-IL)—whowouldlatercosponsorabilltointroduceaCBDC—announcedthe“KeepBigTechOutofFinanceAct”inanattempttoprohibitlargetechnologycompaniesfromofferingfinancialservices(e.g.,cryptocurrencies).45SuchbansmaynotbeinherenttothedesignofaCBDC,butthereisnodenyingthatCBDCsarebeingusedacrosstheworldtocombattheexistenceofcryptocurrencies.tyAnotherconcernwithaCBDCregardsthecentralstorageoffinancialinformation.FederalReservevicechairLaelBrainard,forexample,haswarnedthat“puttingacentralbankcurrencyindigitalformcouldmakeitaveryattractivetargetforcyberattacksbygivingthreatactorsaprominentplatformonwhichtofocustheirefforts.”46ecenthistoryhasshownthatthefederalgovernmentisnotimmunefromhacksordatabreaches.47TheprivatesectorisnotimmuneeitherbutitdoeshavethedistinctadvantageofbeingdecentralizedrelativetothefederalgovernmentWhereanIRSbreachputsall331millionAmericansatriskabreachataprivatefinancialinstitutionwouldonlyaffectafractionofensleavingcustomersatotherbanksefromharmLikewisecryptocurrenciesegBitcoinareoftencelebratedforthesecurityoftheirdecentralizedsystems.Ahackermayattemptto“breakin”toonecomputerinthesystem,butsuchactionsdolittletoaffectthecountlessothercomputersacrosstheworldthatworkaroundtheclocktoverifythesystem.Acentralbankwilllikelyhaveamorerobustsecuritysystemforitshubthanthatoftheaverage,individualBitcoinminerButthegreaterdifficultyisaccompaniedbyagreaterreward.ThatrealitywasmadeclearwhenreportsrevealedtheFederalReservehadmorethan50cyberbreachesbetween2011and2015.49InfacttheFederalReservefellvictimtohackerswhen$101millionwasstoleninacyber-attackontheBankofBangladesh.50RecommendationsforCongressTopreventtheriskstofinancialprivacyfinancialfreedomfreemarkets,andcybersecuritythataCBDCwouldposeCongressshouldexplicitlyprohibittheFederalReserveandTreasuryfromissuingaCBDCinanyform.Todoso,CongresscouldamendtheFederalReserveActasfollows:51(1)Definitions—AAcentralbankdigitalcurrencyisdefinedasadigitalliabilityoftheU.S.governmentissuedormintedbytheFederalReserveorDepartmentoftheTreasury.(2)Section13oftheFederalReserveActisamendedbyaddingafterthe14thundesignatedparagraph(12U.S.C.347d)thefollowing:TheBoardofGovernorsoftheFederalReserveSystemFederalReservebanks,oranydesignatedagentsmaynotofferproductsorservicesdirectlytoanindividual,maintainanaccountonbehalfofanindividual,mintacentralbankdigitalcurrency,issueacentralbankdigitalcurrencydirectlytoanindividual,orissueacentralbankdigitalcurrencytoanindividualthroughanintermediaryorotherdesignatedagent.(B)NoFederalreservebankmayholdcentralbankdigitalcurrencymintedorissuedbytheUnitedStatesGovernmentasassetsorliabilitiesontheirbalancesheetsorusedigitalcurrenciesmintedorissuedbytheUnitedStatesGovernmentaspartoffulfillingtherequirementsundersection2A.ToprohibittheTreasuryfromissuingaCBDCCongressshouldlimittheTreasury’sauthoritytoexpandexistingofferings(e.g.,TreasuryDirect).Forexample,theTreasuryhasalreadyexpandeditsauthoritytoissuesavingsbondstodesignthemyRA(myRetirementAccount)program.52Congressshouldamend31U.S.C.Section3105toprohibittheTreasuryfromofferingormaintainingaccountsonbehalfofindividuals.Likewise,CongressshouldmoreexplicitlylimitthecapabilitiesandpaymentsthroughtheTreasury’sDirectExpresscardswithrespecttoCBDCs.53ToclarifytheapplicationoflegaltenderlawsasfarasaCBDCmightbeconcerned,54Congresscouldusethefollowinglanguagetoamend31U.S.C.Section5103:(1)UnitedStatescoinsandcurrency(includingdefinedasFederalreservenotesandcirculatingnotesofFederalreservebanksandnationalbanksarelegaltenderforalldebtspublicchargestaxesanddues.ForeigngoldorsilvercoinsarenotlegaltenderfordebtsLegaltenderstatusdoesnotrequireprivatebusinessespersons,ororganizationstoacceptUnitedStatescoinsandcurrencyaspaymentsforgoodsandservices.TopreventtheFederalReservefromfurtherencroachingontheprivatesector,Congressshouldalsoamendthe1980DepositoryInstitutionsDeregulationandMonetaryControlActtostrengthentheexplicitrequirementfortheFederalReservetorecoveritscostswhenexploringnewinitiatives.55Todoso,CongresscouldstrikeU.S.C.Section248a(c)(3)andreplaceitwithhefollowinglanguage(1)Overthelongrunaperiodofnomorethanfiveyears,feesshallbeestablishedonthebasisofalldirectandindirectcostsactuallyincurredinprovidingtheFederalReserveservicespricedincludinginterestonitemscreditedpriortoactualcollection,overheadandanallocationofimputedcostswhichtakesintoaccountthetaxesthatwouldhavebeenpaidandthereturnoncapitalthatwouldhavebeenprovidedhadtheservicesbeenfurnishedbyaprivatebusinessfirm,exceptthatthepricingprinciplesshallgivedueregardtocompetitivefactorsandtheprovisionofanadequatelevelofsuchservicesnationwide.FinallyCongressshouldalsorequirethattheFed’scompliancewiththeDepositoryInstitutionsDeregulationandMonetaryControlAct’scostrecoveryprovisionsaresubjecttoregularauditsbythirdparties.56ConclusionCBDCshavethepotentialtoradicallytransformtheAmericanfinancialsystemandallsignspointtothattransformationbeingtothedetrimentoftheAmericanpeople.AU.S.CBDCposessubstantialriskstofinancialprivacy,financialfreedom,freemarkets,andcybersecurity.Yetthepurportedbenefitsfailtostanduptoscrutiny.CBDCshavecertainlymadecentralbanksthetalkofthetownandthrownasplashoflifeintoanotherwisedensepolicyfield.ButthereisnoreasonfortheU.S.governmenttoissueaCBDCwhenthecostsaresohighandthebenefitsaresolow.EndNotes1U.S.HouseCommitteeonFinancialServices,“ThePromisesand