On Wednesday, Texas Senator Ted Cruz submitted a bill in the United States Senate to support Minnesota Representative Tom Emmer’s measure prohibiting the Reserve from providing central bank digital currency, or CBDC, to individuals directly.
Concerns that a retail CBDC would require customers to create accounts with the Federal Reserve Bank spurred Emmer, co-chairperson of the Congressional Blockchain Caucus, to introduce his bill. He also said that centralising financial information about customers would raise security concerns.
The Fed published an analysis report on CBDC in January that went into great detail about the disclosure difficulties involved, emphasising the need to strike a balance between individual privacy and the transparency required to prevent criminal activity. The most acceptable form of a U.S. CBDC, according to the report, would be intermediated, which means “the private sector would supply accounts or digital wallets to simplify the administration of CBDC holdings and payments.”
Intermediation would allow a CBDC to be established without requiring the Fed to change its powers. It would also commit authenticity verification to a private-sector financial services provider, which is another important CBDC attribute mentioned in the document.
According to the Fed study, “the Federal Reserve does not intend to commence with the issuing of a CBDC without clear approval from the executive branch and Congress, ideally in the form of a specific authorization legislation.”
