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| US Government Pursues Development of Digital Dollar Amid Concerns over Financial Privacy |
On March 14th, 2023, reports surfaced that the U.S. government, under the Biden administration, is pursuing the development of a digital dollar. However, concerns have been raised that the proposed central bank digital currency (CBDC) may infringe on Americans' financial privacy rights, leading to the introduction of the CBDC Anti-Surveillance State Act by House Majority Whip Tom Emmer.
The act seeks to ensure transparency and accountability in the development of a digital version of the U.S. dollar while protecting Americans' right to financial privacy. It would restrict the central bank from using a CBDC to control the national economy and implement monetary policy.
Efforts to digitize the dollar must enhance financial inclusion and transaction efficiency without threatening Americans' privacy or sovereignty. The development of the CBDC must be transparent and protect citizens' financial privacy rights, according to Emmer.
The Federal Reserve and the Treasury Department have published several reports on CBDC-related matters, with Fed Chair Jerome Powell outlining four qualifications for supporting a digital dollar: privacy, verifiability, intermediation, and wide acceptance as a means of payment.
However, while the Fed is actively conducting research and technical investigations into both retail and wholesale CBDC designs, it hasn't decided whether to issue a CBDC or how to implement a system.
Central banks worldwide are exploring CBDCs, with approximately 100 nations accounting for around 95% of global GDP said to be involved in the effort. China has already introduced its Digital Currency Electronic Payment, also known as e-yuan, in April 2021, and other countries like India and Japan are running pilot programs.
While the introduction of a digital dollar has the potential to increase efficiency and financial inclusion, it is essential to strike a balance between innovation and protecting citizens' privacy rights.
