A central bank can pump a brake on the Grand Vision to reopen electronic payments around the Federal Reserve on a proposed GOP ban on Digital Currency (CBDC).
Republican MP Banned On Thursday, the government can use a CBDC to survey the financial transactions of Americans over concerns through the House. Banking industry Also advocated The currency is already accessible to the public, arguing with enough access to easily useable and safe digital money.
“Nobody yet knows whether a CBDC is a good idea or not,” rape. Jim Hims (D-Con), which has pushed the government to locate CBDC, said, After the vote of the house,
He said, “There is a possibility of misconduct and corruption, but also for extraordinary modernization that can serve the unbaked communities, support the US dollar’s predominance, and many,” he said.
Fed floated idea in 2022 white paper
In 2022, Federal Reserve A study issuedCBDCs outlined their risks and benefits.
The report stated, “All options for private digital money, including stabcoin and other cryptocurrency, require mechanisms to reduce liquidity risk and credit risk. But all these mechanisms are incomplete,” the report states.
A traditional bank account is supported by the Federal Deposit Insurance Corporation, which guarantees individual deposits of up to $ 250,000 if a bank failure. But there are also risk forms of digital financial services.
In 2024, a financial technology company It is said that Synaps collapsedAnd left customersunable to reach Some $ 265 million in deposits.
A CBDC supported with full confidence and credit of the US government will be the safest digital assets. Fed paper stated that a CBDC could make cross -border pay payments easier and improve access to banking for potentially low -income homes.
Connecticut Democrats, HIMES’s 2022 study proposed that CBDCs may be Used to deposit salary Or even should be integrated into federal programs such as social security.
More ambitious version of CBDC Can allow Americans To keep digital dollars in a bank account with Fed, enables them to make digital payments without an account in traditional bank.
Fed paper said, “Originally changing the structure of the US financial system, changing the roles and responsibilities of the private sector and the central bank.” A government-backed digital dollar-particularly one that can tolerate interest-can also take consumers away from traditional commercial bank accounts.
A CBDC will still need significant studies, from the impacts on the banking system to the technology that will run it. An imaginary CBDC can use existing technology, or it can be distributed on a blockchain, similarly bitcoin and other cryptocurrency are released.
In 2022, former Federal Reserve Vice President Lale Breenard estimated that it will “take”a long time” – at least five years, he said – to start a digital currency, if Congress decided to do so. Fed Chair Jerome PowellSaid in February The bank will not develop a CBDC under its tenure. His term ends in May 2026.
The bill, who now heads the Senate, will prevent the Fed from issuing a CBDC or studying the issue directly or indirectly. Other federal agencies Already prohibitedFrom President Trump to study CBDC due to the January executive order.
Republicans cite secrecy concerns
Privacy is the greatest concern about CBDCs aired by Republican MPs.
The majority of the house Koda Tom Emper (R-Min.), Who led the CBDC sanctions through the house,Said on the floor This will be the same for a digital dollar government monitoring.
He said, “This is the government -controlled programable money, if designed without cash security of cash, it can give the federal government the ability to survey and restrict the transaction of the Americans and monitor every aspect of our daily life,” he said.
Unlike cash, which is essentially unattainable, a CBDC will probably leave a digital record of rough form. If the government chased CBDC, It has to be balancedConcern about privacy with safety measures to prevent its use in money laundering or other illegal activities.
Many MPs have quoted Chinese digital yuan as a worrying example. Tech and China experts, as Reported by WiredIt has expressed concern whether the Chinese government may use its digital currency to track individual transactions or otherwise scoop the installment of consumer data.
Other Republicans have issued a starrer warning about CBDC.
“CBDC is an existential threat to Western civilization,” rape. Warren Davidson (R-Ohio) has written Social platform x,
Banking, Crypto lobby strongly opposed
Banking and cryptocurrency lobbying group Are staunch againstA centrally digital currency was released.
In a letter written to Ameer in April, the American Banking Association argued that Americans already had sufficient access to digital payments.
Leading in private sector along with other digital transfer systems, Fed launched Fedno, a quick payment system, which can operate 24/7 in 2023. Banks have to choose to use service, Whose chief customerInclude jpmorganchase and Wales Fargo.
Broadly, the bank lobby argued that a CBDC would reduce the role of banks in the country’s economic system.
“For example, a CBDC will be a beneficial contestant for retail bank deposits that will take money from banks and in the Federal Reserve, which will severely limit the capacity of commercial banks, which to provide electricity to economic growth in communities across the country,” Group wrote,
A CBDC can also expect that bitcoin or privately developed stables such as cryptocurrency – cryptocurrency that is valued for a reference property like US dollars – can become the primary form of digital money.
Powell said, “You won’t need stabechoin; you would not need cryptocurrency, if you had a digital American currency,” Powell said. A Congress hearing in 2021“I think it is one of the strong arguments in its favor.”
