Today’s financial system is not perfect, but it usually works so well that people rarely stop to ask: “Whose liability is it anyway?” Yet, being a direct liability of the central bank is a defining feature of a CBDC. In practice, that trait means destabilizing the financial system is a defining feature of a CBDC. Consequently, the risk posed to financial markets is just another reason why Congress should prohibit the Federal Reserve and Treasury from issuing a CBDC.

Cato