The U.S. has been working on its own Central Bank Digital Currency (CBDC). And in order to maintain the dollar as the dominant currency in the U.S., Fed is prohibited from issuing CBDCs to individuals. This was done by passing a bill in Congress by a U.S. lawmaker. According to the lawmaker, the authority to offer retail bank account shouldn’t simply rest with the Federal Reserve.
Why is the Fed being restricted?
The main goal of this bill is to make sure that the dominance of the dollar is maintained alongside innovating in the blockchain space. According to the lawmaker, China’s take on CBDC directly violates the “benefits and protection of cash.” And they cannot do the same in the U.S. as otherwise, the Fed can become a retail bank itself and collect information on users and transactions indefinitely. This will make CBDCs a tool to centralize all the data of American users. And this will make the data vulnerable to attacks and will also be protested against by the civilians. Hence, the Fed is prohibited from issuing CBDCs to individuals.
We need to understand that the idea of crypto is so loved because of decentralization. It takes power away from the government and gives it to the common public. So, in case the CBDCs make the system even more centralized, it will not be adopted or used. At the same time, protests from the citizens will become unavoidable. Plus, if the Fed does this, it will make put them on a similar path to China.
With this bill, the lawmaker wants that the CBDC that will be implemented stays open, permissionless, and private. There is no need to compete with the private sector, which means that the US CBDC doesn’t need to go against the likes of Bitcoin or Ethereum. At present, we need to wait for the CBDC report to the released by the Federal Reserve that was supposed to be out last year. The Fed said that they are going to put it out in a few weeks.
What are your thoughts as the Fed is prohibited from issuing CBDCs to individuals after the new bill? And do you think that this will help the dollar? Let us know in the comments below. Also, if you found our content informative, do like and share it with your friends.