Bitrabo Editorial
US Treasury official, Graham Steele, highlights the advantages of a retail Central Bank Digital Currency (CBDC) backed by the Federal Reserve. This would provide safety during bank runs and stabilize private sector lending.
Striking The Anonymity Balance
In a recent Texas payments conference, Graham Steele emphasized the significance of anonymity when considering the development of a future Central Bank Digital Currency in the United States.
Steele stressed the importance of privacy and anonymous transactions and the need to incorporate these considerations into the design of a digital dollar.
During a conference on June 13, the Assistant Secretary for Financial Institutions at the Treasury Department discussed the Federal Reserve’s FedNow system and the potential implementation of CBDCs.
Steele emphasized the necessity of addressing privacy and anonymity, suggesting the exploration of available technologies and methods, such as Privacy Enhancing Technologies, to ensure these protections are included in the potential design of a retail CBDC.
In his speech, he carefully assessed the advantages and risks of a prospective CBDC, recognizing its potential to foster a competitive payment landscape.
Exploring The Potential Of A Retail CBDC
Steele highlighted the potential advantages of a retail CBDC directly backed by the Federal Reserve. He believes such a digital currency could offer a safer alternative for consumers during bank runs and potentially mitigate the risk of destabilizing private-sector lending.
Steele pointed out that access to non-deposit alternatives outside the traditional banking system may have influenced the nature and speed of bank runs, referring to recent banking crises. The United States is currently evaluating the implications of introducing a CBDC within the country.
This evaluation encompasses various policy objectives, including global financial leadership and national security considerations.
Regarding the Federal Reserve’s FedNow instant payments system, Steele expressed support for fostering multiple payment options to promote choice, competition, and resilience in the payments ecosystem. He believes this environment would encourage the development of innovative payment services and features.
However, the FedNow system has faced opposition from political figures who argue that its implementation could pave the way for a CBDC, giving excessive control to the government.
In April, Federal Reserve Board governor Michelle Bowman expressed skepticism about the widespread justification of a CBDC beyond its application in interbank and wholesale transactions, making it challenging to envision its broader use.
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