Congressman Tom Emmer introduced a bill this week that would effectively stifle any Fed-issued US central bank digital currency (CBDC) before it hatches. He’s concerned they’ll enable mass surveillance at grand scale.
The bill, which seeks to amend Section 13 of the Federal Reserve Act, would ban the Fed from issuing CBDCs to anyone.
The Fed would also be restricted from maintaining CBDC-related accounts on behalf of others, eliminating the possibility of cute workarounds.
Emmer is worried that CBDCs introduce a “central point of failure” that attackers and other bad actors could exploit.
“It could also be used as a surveillance tool that Americans should never be forced to tolerate from their own government,” he tweeted on Wednesday.
On a recent appearance on Bitcoin influencer Nic Carter’s On the Brink podcast, Emmer explained he’d be open to the idea of an “interbank CBDC” that does not involve direct banking between US residents and the Fed.
Individuals should continue banking at private banks as they always have, he told Carter, and those banks can have their own relationships with the Fed.
This is to avoid mimicking China’s authoritarian digital and economic policies, which Beijing is pushing via its own CBDC, the digital yuan.
China plans to conduct a widescale debut of its CBDC during the 2022 Winter Olympics next month. Last November, a Chinese official claimed that its CBDC had already executed $9.7 billion worth of transactions.
Emmer: CBDC would put Fed on ‘insidious path’
Ultimately, the Minnesotan rep wants any dollar-equivalent CBDC to provide the same privacy as cash. Emmer’s concerns remind of the early praise for crypto’s potential to protect economic privacy while “banking the unbanked.”
Those who currently face difficulty accessing mainstream financial systems could find it tough to access CBDCs that demand direct interaction with the Fed.
“Requiring users to open an account at the Fed to access a [US] CBDC would put the Fed on an insidious path akin to China’s digital authoritarianism.”
Going even further, Emmer has voted against US athletic participation in the 2022 Olympics. “Even if they do attend,” he said on Carter’s podcast, “they should not download any Chinese digital currency wallet onto their phones.”
For what it’s worth, the UK Parliament’s House of Lords Economic Affairs Committee has echoed Emmer’s criticism.
Committee members this week said they could find no “convincing case” for a Bank of England-issued CBDC. They cited risk of bank runs during economic downturns and potential abuses of privacy.
The report stated (via The Independent, our emphasis):
“These risks include state surveillance of people’s spending choices, financial instability as people convert bank deposits to CBDC during periods of economic stress, an increase in central bank power without sufficient scrutiny, and the creation of a centralised point of failure that would be a target for hostile nation state or criminal actors.”
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