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According to a spokesman for the US Department of the Treasury, when designing a digital dollar, privacy and the ability to make anonymous transactions should be taken into account.
On June 13, Assistant Secretary of the Treasury for Financial Institutions Graham Steele spoke at a payments conference in Texas about the controversial FedNow Federal Reserve System and Central Bank Digital Currencies (CBDCs).
Steele said one of the goals of a retail CBDC is to minimize illegal transactions while maintaining user privacy. He said that you still need to think about how to protect the anonymity of users:
“It is important that we consider the extent to which privacy and anonymity can be maintained and explore the technologies and methods available, including privacy enhancement technologies, to provide such protection when developing any potential retail CBDC.”
In his keynote, Steele weighed the benefits and risks of a possible CBDC, stating that it could help create a “competitive payment environment.”
On the other hand, a retail CBDC would be directly backed by the Fed and could provide consumers with a safer option during a bank run, which Steele says could “destabilize private sector lending.”
He pointed to the recent banking crisis and said that “access to no-deposit alternatives outside the banking system could change the nature and speed of bank runs.”
He added that the U.S. “has not yet decided whether it will pursue a CBDC,” but a team led by the Treasury Department is assessing the implications of a potential CBDC in the country.
Steele said the assessment includes a review of “policy objectives related to global financial leadership, national security and privacy, illicit funding and financial inclusion.”
Related: 7 Central Banks and BIS Continue to Explore Current Policy Issues for Retail CBDC
At FedNow Instant Payments, Steel believes that having multiple payment transaction options “promotes choice and competition in payments,” which he believes will encourage “the development of new payment services and features” while making the payment system more resilient.
FedNow has witnessed political resistance. Presidential candidates Robert F. Kennedy Jr. and Ron DeSantis are opposing the system, arguing that it will pave the way for the CBDC, which they both argue will give the government too much control.
In April, Federal Reserve Board Chair Michelle Bowman said it was “hard to imagine” that CBDC use could be justified beyond being used in “interbank and wholesale transactions.”