OPINION:
Recent closed-door meetings among the White House, the Federal Reserve and America’s largest banks revealed a terrifying reality: The U.S. economy is sitting in the crosshairs of unprecedented cybersecurity threats.
As ever-evolving artificial intelligence models and foreign adversaries probe our vulnerabilities, we will need defenses from every angle.
The Fed has the unique legitimacy and power to advocate for protective measures that keep our economy running no matter what happens online. To do so, it first must reexamine its “neutrality” stance on the single most reliable economic fail-safe we have: cash.
For too long, the Fed has treated cash and digital payments as equivalent, competing tools for purchasing goods and services. When Congress created the Fed in 1913, it could not have anticipated that ordinary commerce would one day be routed through layers of private, fee-charging, data-collecting, electronically dependent intermediaries.
Today, more than 100 years later, this is our reality. Digital payment rails, while offering convenience at a cost, involve fundamentally different systems, are built on different values and carry different consequences for privacy, inclusion, resilience and national security.
Unlike cash, digital payment systems create vulnerabilities and inequalities because of dependency on electricity, connectivity, software, devices and private, profit-driven platforms.
The Fed should urge Congress to pass the bipartisan Payment Choice Act, which would require physical retailers to accept cash for purchases of $500 or less. A nationwide survey by the Siena Research Institute found that 88% of Republicans and 84% of Democrats would support this bill, and that 95% of respondents favor retaining cash for national security purposes.
To be clear, the Fed does not need to oppose digital payments. Clearly, digital payment options are here to stay and, hopefully, will become less expensive and less intrusive.
Still, the central bank must remember that cash offers a modest safeguard for payment choice and our continued economic resilience, something our government should support.
JEFF THINNES
CEO, JTI Inc.
Great Falls, Virginia.
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