Why did the US Congress propose a bill to ban the Fed from issuing CBDC?

Time:2022-01-12 Source: 746 views Trending Copy share

Representative Tom Emmer of the 6th District of Minnesota has proposed a bill targeting the U.S. central bank digital currency (CBDC), stating that the Federal Reserve is prohibited from issuing digital assets.

The administration official claimed that a CBDC could bring more disadvantages than benefits to U.S. citizens. On this basis, he argues that China's digital currency "ignores the benefits and protection of cash".

China has been developing a CBDC for a few years, and is making steady progress, with a possible mass launch during the 2022 Beijing Winter Olympics. Tom Emmer believes that this move optimizes China's payment system, but in a sense harms the freedom of the people.

The digital yuan will be more transparent, censorship-prone, and allow the government to fully monitor everyone’s finances. On this basis, the U.S. government official raised his doubts about China’s CBDC and released several of his proposed drafts:

Tom Emmer believes, “It is more important than ever to ensure that U.S. digital currency policy protects citizens’ financial privacy, preserves the dominance of the U.S. dollar, and fosters innovation. A CBDC that does not adhere to these three fundamental principles will enable the Federal Reserve to Entities like (Fed) become retail banks, collecting personally identifiable information from users and tracking their transactions indefinitely."

In doing so, the financial system would be vulnerable to a single failure and open the door to total control over citizens. Additionally, the government official believes that a CBDC could become a surveillance tool, giving the U.S. government a greater ability to spy on its citizens.

Emmer added: “requiring users to open an account with the Federal Reserve to gain access to a CBDC in the U.S. would put the Federal Reserve on a path to monitoring the entire population.”

Emmer called for a U.S.-issued CBDC to be “open, permissionless, and private.” The administration official, who has been a member of Congress who has actively pushed for regulation of Crypto, has a very different approach to CBDCs and other digital assets.

The United States and its Federal Reserve claim to be working on a CBDC. Federal Reserve Chairman Jerome Powell acknowledged that the U.S. payment mechanism would gain more benefits if digital assets were integrated.

However, the U.S. has yet to announce plans to develop, create or launch a CBDC in the near future. Some government officials, including Emmer, believe the U.S. must embrace innovation to maintain its status as a major currency.

Emmer believes that “in order to maintain the dollar’s status as the world’s reserve currency in the digital age, the United States should adopt an attitude that prioritizes innovation over competition with the private sector. Simply put, we must prioritize blockchain technology with American characteristics.”

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