Federal Reserve's Focus on Digital Currency Continues Amid Opposition and Concerns
Summary:
U.S. Representative Tom Emmer suggests that the Federal Reserve (Fed) continues to prioritize the introduction of a Central Bank Digital Currency (CBDC). Despite the Fed Chairman Jerome Powell asserting that a CBDC is far from being recommended or deployed, the Fed is reportedly considering how to digitalize the U.S. dollar through platforms like Automated Clearinghouse and FedNow. Meanwhile, concerns mount over the potential for increased financial surveillance if CBDCs are introduced. Prominent individuals, like former U.S. President Donald Trump and presidential candidate Robert F. Kennedy Jr, are vocal opponents, citing risks to freedom and civil rights. Additionally, the 'Digital Dollar Pilot Prevention Act', currently backed by the House Financial Services Committee, would constrain the Fed from launching CBDC pilot programs without Congressional approval.
The prospect of a digital currency backed by the United States central bank, also known as a Central Bank Digital Currency (CBDC), continues to be a key consideration for the Federal Reserve, suggests U.S. Representative Tom Emmer, a critic of CBDCs. In a posting on X on March 14, Emmer advised those who doubt the Fed's interest in CBDCs to reconsider, citing a document presented during a Federal Reserve briefing to Congress, purportedly given to his staff.
On March 7, just a week before this post, Federal Reserve Chair Jerome Powell, while testifying before the Senate Committee on Banking, Housing and Urban Affairs, emphasised that the U.S. is far from recommending or implementing any type of CBDC. However, the document highlighted by Emmer does not contradict these remarks, but rather supports the notion that CBDCs remain within the Fed's purview. The Fed's commitment to digitalizing the U.S. dollar is illustrated through its focus on Automated Clearinghouse and FedNow, two electronic payment infrastructures mentioned among the seven listed 'Key Duties' of the central bank's payment systems.
In January 2022, the Federal Reserve issued a paper discussing CBDCs, in an attempt to understand their possible advantages and shortcomings. The central bank is also supervising the digital dollar project, which has seen multiple test runs recently. The Fed, as of last April, has not made a final decision on adopting a CBDC.
CBDCs have been a sensitive topic within and beyond the crypto sector, with concerns over a potentially more closely-monitored financial environment.
Former U.S. President Donald Trump, in January, swore to reject the establishment of a CBDC if he gets reelected, and recently labeled the digital dollar as a high-risk concept. Trump stated, "It's a dangerous threat to freedom, and I will prevent it from entering America.”
U.S. Presidential candidate Robert F. Kennedy Jr has also committed to opposing the creation of the digital dollar, identifying CBDCs as a disaster for human and civil rights.
Initiatives have also been undertaken within the U.S. Congress, such as the backing from the House Financial Services Committee for the 'Digital Dollar Pilot Prevention Act'. This act, if passed, would prevent the Federal Reserve from launching CBDC trial programs sans Congressional approval.
Published At
3/15/2024 3:16:26 AM
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