forbes.com
Hierarchy of Money: Cash, CBDCs, and the Anti-CBDC Bill
This article analyzes the hierarchy of money, highlighting cash and CBDCs as superior forms, and discusses an anti-CBDC bill driven by privacy concerns and private enterprise interests.
- What is the hierarchy of money described in the article, and what are the key characteristics of the highest forms?
- The article establishes a hierarchy with cash at the top, possessing superior liquidity and minimal counterparty risk. CBDCs are considered the only digital equivalent, sharing these characteristics. Lower rungs include bank money, bonds, and eventually forms of credit.
- How does the article position stablecoins and cryptocurrencies within this hierarchy, and what are their limitations?
- Stablecoins are placed lower than cash and CBDCs, falling within either M1 or M2 money supply measures. Cryptocurrencies' position is deemed irrelevant due to their transnational nature and lack of central liability. Their lower liquidity and higher risks are implied.
- What are the main arguments for and against the anti-CBDC bill, and what are the potential consequences of its passage?
- The bill opposes CBDCs due to surveillance concerns, but the article argues that privacy-enhancing technologies could mitigate this. Furthermore, the article suggests the bill is driven by private enterprise interests seeking to promote stablecoins over a superior public utility, potentially harming the public interest.
Cognitive Concepts
Framing Bias
The article presents a strong pro-CBDC stance, framing cash and CBDCs as superior to other forms of money. The hierarchy presented positions CBDCs at the top, implicitly advocating for their adoption. The headline, while neutral, sets the stage for this perspective. The repeated emphasis on CBDCs' safety and the critique of the Anti-CBDC bill reinforce this framing.
Language Bias
The author uses language that favors CBDCs. Terms like "highest rung," "safest form of money," and "superior" create a positive connotation for CBDCs, while terms like "lower in the hierarchy" and "less moneyness" negatively frame other forms of money. For example, instead of "lower in the hierarchy," a neutral alternative would be "less liquid.
Bias by Omission
The article omits discussion of potential downsides of CBDCs, such as potential for government overreach or technical vulnerabilities. While acknowledging privacy concerns related to surveillance, it downplays these concerns by mentioning privacy-enhancing technologies. The potential for central bank manipulation of the money supply is also not addressed.
False Dichotomy
The article presents a false dichotomy between CBDCs and other forms of digital money, particularly stablecoins. It frames the choice as either adopting CBDCs (superior) or accepting inferior alternatives, ignoring the complexities and potential benefits of a multi-faceted digital financial system.
Sustainable Development Goals
The article discusses the hierarchy of money, highlighting the differences between various forms of money and their accessibility to different groups. A central bank digital currency (CBDC) is presented as a potential solution to improve access to a safer form of money for the general public, potentially reducing inequalities in financial access. The discussion of Modern Monetary Theory (MMT) also touches upon the potential for government intervention to address economic inequalities through fiscal policy.