Some US congressmen have expressed concerns or opposition to the idea of a Central Bank Digital Currency, or CBDC, being pushed by the US Federal Reserve.
One of them is Rep. Tom Emmer (R-Minnesota), who on February 22 presented a bill to restrict the Fed from issuing CBDCs to private retail consumers.
Emmer, one of the most prominent backers of cryptocurrencies in Congress, offered similar legislation early last year. To protect user privacy, the measure attempted to mandate that any digital currency developed by the central bank be “permissionless.” The bill failed to pass.
Proposed Measure: CBDC Anti-Surveillance State Act
The legislator stated Wednesday that he had introduced the “CBDC Anti-Surveillance State Act” in an apparent effort to defend Americans’ financial privacy rights.
Emmer pointed out that the law may restrict the Fed from releasing a digital dollar “directly to anyone,” prohibit it from adopting monetary policy based on the virtual currency, and necessitate openness for programs using a digital dollar.
US Rep. Tom Emmer. Image: Tom Emmer
According to the Minnesota representative, any digital currency must maintain American ideals of privacy, personal freedom, and fair market competition.
Emmer, who is the Majority Whip for the House where Republicans currently hold a majority of seats, clarified:
“Anything less opens the door to the development of a dangerous surveillance tool.”
Today, I introduced the CBDC Anti-Surveillance State Act to halt efforts of unelected bureaucrats in Washington, DC from stripping Americans of their right to financial privacy. 👇 pic.twitter.com/lONbHFZMk7
— Tom Emmer (@GOPMajorityWhip) February 22, 2023
Central bank digital currencies are digital replicas of national fiat currencies that primarily operate on private blockchain networks, which means they are still tightly managed and governed by the issuing jurisdiction.
Studying The Pros & Cons Of The Digital Dollar
The Federal Reserve has been studying the potential benefits and risks of a digital dollar for some time, but it has not yet made a final decision on whether to issue a digital dollar or not.
In a speech in May 2021, Federal Reserve Chair Jerome Powell said that the central bank is actively exploring the possibility of a virtual currency and is conducting research and experiments to better understand the implications of such a currency.
Image: Ledger Insights
Powell also emphasized that any decision to issue a digital dollar would be based on careful consideration of the potential benefits and risks.
The Fed has also indicated that it will engage in extensive public consultation and stakeholder engagement if it decides to move forward with a CBDC.
Thumbs Up From Social Media
If Emmer’s proposed legislation is approved by the House and Senate and signed into law by US President Joe Biden, it would change the Federal Reserve Act to restrict the central bank’s control over digital currencies.
Many on social media praised the measure as a positive development. Dan Held, a Bitcoin enthusiast, commended Emmer’s actions, while others cited privacy rights as one justification they backed the proposal.
Various countries, including those of Japan, Britain, Turkey, the European Union, and China, are in the process of implementing their own digital currency.
Crypto total market cap at $1 trillion on the daily chart | Chart: TradingView.com
According to a report by the Bank for International Settlements (BIS), the potential market size for CBDCs could be around $23 trillion in the United States alone.
The report notes that this estimate is based on assumptions about the share of cash and bank deposits that CBDCs could replace.
Other estimates suggest that CBDCs could provide significant benefits, including increased financial inclusion, reduced transaction costs, and improved monetary policy.
However, there are also concerns about the potential risks of CBDCs, such as privacy and security concerns.
Overall, while the market value of CBDCs is currently unknown, the potential for CBDCs to transform the financial system is significant, and the development of CBDCs is an area that is being closely watched by policymakers and financial institutions around the world.
-Featured image from KATU