The Federal Reserve System, commonly known as the Fed, has introduced a bill to prevent the issuance of central bank digital currency (CBDC) directly to consumers.
Republican Senator Ted Cruz made an official statement on March 21, announcing his bill aimed at restricting the Fed’s ability to issue a retail-only CBDC, citing concerns regarding privacy protection and financial oversight.
CBDCs are digital currencies issued by a country’s central bank to replace or supplement fiat currency. They are considered more stable than other cryptocurrencies because they are issued and managed by the central bank. However, the potential for the Fed to use CBDCs as a tool for financial oversight has raised concerns.
Cruz stated that if the principles of privacy protection are not followed, the Fed’s CBDC could be used as a weapon capable of collecting users’ personal information and indefinitely tracking citizens’ financial transactions.
Despite this, CBDC issuance is a global trend, with over 100 countries currently considering it. China’s central bank, the People’s Bank of China, has been researching digital currency since 2014 and has been named the most advanced country in this field. The digital yuan, issued by the People’s Bank of China, is currently accepted at 8 million stores in China.
Additionally, the European Central Bank, Bank of England, Bank of Japan, Bank of Canada, Swedish Central Bank, and Swiss National Bank have created a CBDC joint research group as of January 2020.
The bill proposed by Senator Cruz highlights the need for further discussion and debate surrounding the role of CBDCs in the global financial system, especially regarding privacy and government oversight.
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