The Fed's Digital Dollar Would Be 'Nightmareville' for Privacy
Ella Lubell | 6.10.2021 2:20 PM
The U.S. government is thinking about creating an electronic currency backed directly by the dollar, an idea dubbed the "digital dollar" or "Fedcoin." Such a step could severely damage trust in the dollar and risk Americans' privacy.
Blockchain technology has allowed countries across the world—most notably China —to create central bank digital currencies (CBDCs), which allow people to exchange money electronically without going through a bank or a secondary service such as PayPal or Venmo.
In a recent video , U.S. Federal Reserve Chair Jerome Powell announced that the Fed intends to issue a discussion paper about the "benefits and risks associated with CBDC in the U.S. context." While Powell's statement was generally neutral, stressing the importance of taking time to assess "the broader risks and opportunities," other oficials have more pointedly favored the idea. Fed Governor Lael Brainard endorsed a digital dollar at a recent conference sponsored by CoinDesk, and Sen. Sherrod Brown (D-Ohio) wrote in March that a CBDC could help create a more "fair and equitable financial system" by allowing unbanked Americans to pay electronically without a bank account, credit card, or internet connection.
CBDC boosters also argue that the currencies are more efficient , since transactions that use them would not have to travel through as many intermediaries. This, they say, could reduce the friction of international payments and make global transactions easier.
