US Treasury official Graham Steele stresses the advantages of central bank retail currencies backed by the Federal Reserve, providing security during bank operations and stability in private sector lending.
Striking the balance of anonymity
During a recent payments conference in Texas, Graham Steele highlighted the importance of anonymity when considering the development of a future central bank digital currency in the United States.
Steele emphasized the importance of privacy and anonymous transactions, and expressed the need to incorporate these considerations into the design of the digital dollar.
Speaking June 13 at a payments-focused conference, the Assistant Secretary of the Treasury for Financial Institutions at the Treasury Department discussed the controversial FedNow system, the Federal Reserve, and potential implementation of central bank digital currencies.
Steele stressed the need to address the issue of preserving privacy and anonymity, calling for exploration of available technologies and approaches, such as privacy-enhancing technologies, to ensure that such protections are included in the potential design of a retail central bank digital currency.
In his speech, he assessed the potential benefits and risks of a central bank digital currency, recognizing its potential to enhance the competitive payments landscape.
Exploring the potential of retail CBDCs
Steele highlighted the potential advantages of a retail central bank digital currency backed directly by the Federal Reserve. According to Steele, such a digital currency could provide a safer alternative for consumers during bank runs, potentially mitigating the risk of destabilizing private sector lending.
Drawing attention to recent banking crises, Steele noted that access to alternatives other than deposits outside the traditional banking system may have affected the nature and speed of bank management operations. While the United States has not yet made a firm decision about pursuing a central bank digital currency, an ad hoc group led by the Treasury Department is currently assessing the implications of introducing a central bank digital currency within the country.
Steele explained that this assessment includes various policy goals, including global financial leadership and national security considerations.
Turning to the Federal Instant Payments system, Steele expressed support for promoting multiple payment options; It is believed that it may enhance choice, competition and flexibility within the payments system. It is expected that such an environment would encourage the development of innovative payment services and features.
However, the FedNow system has faced opposition from political figures. Robert F. Kennedy Jr. and Ron DeSantis, both presidential candidates, argue that its implementation could pave the way for a CBD, which they believe would give excessive control to the government.
In April, Fed Governor Michelle Bowman They expressed skepticism about the widespread justification of CBD outside of its application in interbank and wholesale transactions, arguing that it was difficult to envision its wider use.
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