- The US government is evaluating the implications of Central Bank Digital Currency.
- Some political factions have raised doubts about it and said it could compromise individual financial privacy.
The talks of introducing a government-run digital currency have been going around for quite some time. there are some who are welcoming this proposal. But many, who believe in maintaining a fully-decentralized asset, have an adverse view of it. And after more than a decade of cryptocurrency’s existence, governments have decided to induct this technology into their mainstream economy.
Govt’s take on CBDC
The US government seems to be taking some serious steps in this direction. Speaking at a conference in Texas about the Federal Reserve’s FedNow system and Central Bank Digital Currency (CBDCs), the Treasury Department’s Assistance Secretary for Financial Institutions, Graham Steele, indicated at a few things.
He said that the government is emphasizing keeping the anonymity aspect intact in digital transactions. Expressing concern about the chances of security lapse, he said that the retail CBDC must be able to prevent illegal transactions while maintaining user privacy.
His statement indicates that a regulated CBDC will promote a competitive payment environment. Also, CBDC is designed to become a safer option while being underpinned directly by the Feds. It would be very helpful in situations like bank runs and other such conditions.
Highlighting its attributes, he said that CBDC emerges as the solution to access issues that the existing banking system faces. He asserted that the nature and speed of the transaction will improve phenomenally.
Analyzing all prospects of the technology
However, the US has not made up its mind on rolling out its own CBDC yet. Currently, they are weighing the options and seeing how this technology will boost the economy.
Steele remarked that the evaluation is focused on checking its support for privacy, financial inclusion, illicit finance, leadership, and national security. The analysis will carefully determine if CBDC will go in sync with the policy objectives of the government or not.
Commenting on the FedNow instant payment system, he said that having multiple options in payment operations will boost competition and give more choices to consumers. According to him, it will beef up the system’s resilience while bringing cutting-edge services and features.
But FedNow is not getting support from all the political factions. The presidential candidates Ron DeSantis and Robert F. Kennedy Jr. have expressed their adverse views on the system. They are saying that it would compromise people’s control over their assets. The government will wield greater dominance over public assets with such a payment framework.
In April, Federal Reserve Board governor Michelle Bowman said that CBDC’s implementation in consumer and retail transactions may not be an ideal scenario. He indicates that the government-run digital asset is more suitable for interbank and wholesale transactions.
Conclusion
While the concept of CBDC has gained traction among various countries, its application is still debatable due to many reasons. Though the governments have shown interest in them at a certain level, only time will tell if the government-run digital asset will do some good to the economy or people.
