The US government is ramping up to develop a CBDC, a digital dollar that facilitates more efficient and secure payments.
But the launch of an US CBDC could come at a risk to citizens’ privacy, according to Congressman Tom Emmer.
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Minnesota Representative Tom Emmer spoke at the Cato Institute on Thursday about the future of the US upon the potential implementation of a central bank digital currency (CBDC).
The digital dollar, as warned by the Republican Sen., threatens to disrupt the country’s monetary system.
The idea of a programmable CBDC will ultimately put the control in hands of the issuer while potentially taking away financial privacy from people who are forced to use it.
In a worst scenario, it could be used as a powerful tool to spy on US citizens.
“As the federal government seeks to maintain and expand financial control to which it has grown accustomed, the idea of the central bank digital currency has gained traction within the institutions of power in the United States as a government-controlled programmable money that can be easily weaponized into a surveillance tool.”
In February, Rep. Tom Emmer introduced a bill to prevent the Fed from issuing a digital dollar and calling for public updates from current CBDC projects.
His CBDC Anti-Surveillance Act is one of a few authority efforts to question the deployment of the CBDC in financial privacy protection.
Few Understand The Risks
Similar to stablecoins, CBDCs are digital tokens pegged to the price of a sovereign currency like the US dollar. However, CBDCs are issued by government and central banks, rather than private organizations.
Emmer also argued that the US’s urgent plan to catch up with the global CBDC race was dangerous as it could result in “a CBDC that is not open, permissionless and private.”
This unfair trade-off is poised to invade American values including individual privacy, sovereignty, and the free markets.
Fed Chairman Jerome Powell previously said that he was mull on whether to issue a CBDC and considered issues such as privacy. But Emmer believes that the US administration is already working on digital dollar CBDC for financial surveillance.
Implementation Coming Soon
As countries such as China, Japan, and Australia are at the forefront of technology discovery, over 110 countries worldwide are testing, developing, or exploring the technology, including the United States.
In the United States, there are several CBDC projects underway.
The New York Federal Reserve announced a 12-week CBDC pilot project in collaboration with commercial banks to test the interoperability network between wholesale CBDC and commercial bank digital currency
Some countries, most notably China, significantly enhanced their CBDC programs throughout 2022 and are now firmly in the phase of actual implementation, while others are newly started to study their feasibility.
Some Understand the Risks
A minority of countries, like Ecuador, officially abandoned their CBDC program, to fully embrace the decentralized potential of cryptocurrencies like Bitcoin.
But, it appears that the initial encouragement swiftly escalated into pressure.
In 2021, China put an expiration date on its digital yuan, forcing people to spend CBDCs. A similar scenario came in Nigeria.
Nigeria is home to one of the most robust CBDC programs in the world.
The unfortunate reality is that the people of Nigeria do not support this concept. It was believed that less than 0.5% of the population was making use of the e-Naira issued by the central bank.
To address this issue and force people forward to CBDC, the government has instituted restrictions on the amount of money that can be withdrawn from ATMs.
The duty of the government is to protect its country and people. The prospect of a CBDC being used to catch major criminals or prevent illicit activities could be worthwhile.