Opinion: Banking sector rightly wary of CBDC

JPMorgan and other TBTF banks in the U.S. view central bank digital currency (CBDC) as a government-backed threat to their business, said economist and former Greek finance minister Yanis Varoufakis.

In his Project Syndicate essay the expert compares the sector’s current fears to smoking restrictions.

“Long ago, the greed of tobacco companies was channeled through libertarian outrage over restricting smokers’ freedom to choose cancer. This time, the discontent serves bankers’ interests, panicking at the sight of the Fed’s accounts. The masters of the TBTF universe are right to fear, because federal CBDC threatens the construction of their empire,” Varoufakis explained.

According to the former minister, financial institutions expect that with the launch of the central bank digital currency their services will lose a significant portion of demand.

However, he notes that, contrary to popular belief, CBDC do not necessarily constitute a dystopian nightmare. The technology could become far more private and “resistant to tyranny” than the current private banking sector, Varoufakis says.

“A properly and democratically controlled deployment of CBDC can bring net benefits for tax collection, fighting deflation and strengthening protection from Big Brother and its many junior brothers,” the economist added.

In May, Texas senators introduced a bill banning the use of the digital dollar within the state.

Separately, in Florida, a CBDC-opposing measure has already been enacted, signed into law by Governor Ron DeSantis. He argues the law “will protect residents from the administration of the President of the United States, which wants to turn the financial sector into a weapon.”

Later in the United States introduced “the first bipartisan” bill that would ban the Fed from issuing a central bank digital currency.