Simon Ng Several U.S. legislators have raised alarms about the potential invasion of privacy if the Federal Reserve were to introduce a central bank digital currency (CBDC). “The right to financial privacy is a cornerstone of American liberties,” said one representative, stressing, “The U.S. should not adopt a CBDC that allows for the monitoring of individual transactions in the manner that China’s digital yuan does.” Another legislator likened the CBDC to an authoritarian regime, stating, “A CBDC stands in relation to sound money as a dictatorship does to individual freedoms.”
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The Right to Financial Privacy is Fundamental for Americans
Multiple members of the U.S. Congress have cautioned against the Federal Reserve’s possible issuance of a CBDC. Representative French Hill (R-AR), who chairs the Congressional Digital Assets Subcommittee, posted on social media platform X the following:
The fundamental right of Americans to financial privacy should be upheld. There is no need for a CBDC that can surveil your transactions, similar to how China employs its digital yuan.
“Legislative authority for the creation and implementation of a CBDC resides with Congress, not with unelected officials. This is not a partisan issue,” Hill further emphasized.
Long critical of the Federal Reserve’s potential move towards a CBDC, the Congressman said, “I comprehend the apprehensions that Americans have towards CBDCs, especially the risks of invasive governmental oversight. I share these worries. Ensuring that the federal government neither proceeds nor contemplates issuing a CBDC without Congressional consent is a priority for me.” He expressed these concerns as early as October of the previous year.
To maintain the U.S. dollar’s status as the dominant global reserve currency, Hill introduced HR 3506, known as the 21st Century Dollar Act, in 2021. He elaborated on this on platform X, formerly known as Twitter.
Several fellow legislators have also voiced their reservations about a CBDC issued by the Federal Reserve. Representative Patrick McHenry (R-NC) stated in May last year, “Any plans for a Federal Reserve CBDC must be authorized through Congressional legislation. Before initiating any actions, Congress must first comprehensively understand the risks posed by a CBDC to privacy, innovation in the private sector, and American consumers.”
Likewise, Representative Warren Davidson (R-OH) remarked on August 25, “A CBDC is as antithetical to sound money as dictatorship is to freedom. One essentially nullifies the other. Incidentally, if one aimed to institute or enforce authoritarian rule, a CBDC would be the ultimate instrument of control.” In a prior statement, he noted:
The Federal Reserve is in the process of creating a financial apparatus that resembles a tool of tyranny. A central bank digital currency would transmute money into an instrument for manipulation and regulation. It is imperative that Congress act immediately to prohibit, and subsequently criminalize, any endeavors to create, develop, or launch a CBDC.
What are your thoughts on the concerns expressed by U.S. legislators regarding the privacy risks associated with the issuance of a CBDC by the Federal Reserve? Share your opinions in the comments section below.
Frequently Asked Questions (FAQs) about Federal Reserve CBDC
What is the main concern U.S. legislators have about the Federal Reserve issuing a CBDC?
The primary concern expressed by U.S. legislators is the potential infringement on Americans’ financial privacy. They argue that a CBDC could enable the government to monitor individual transactions, similar to the surveillance capabilities of China’s digital yuan.
Who are some of the lawmakers that have expressed reservations about a Federal Reserve CBDC?
Representative French Hill (R-AR), who chairs the Congressional Digital Assets Subcommittee, Representative Patrick McHenry (R-NC), and Representative Warren Davidson (R-OH) are among the lawmakers who have raised concerns about the Federal Reserve issuing a CBDC.
What is the 21st Century Dollar Act?
The 21st Century Dollar Act is legislation introduced by Representative French Hill in 2021. The Act aims to ensure that the U.S. government has a strategy for maintaining the dollar as the primary global reserve currency, whether or not a CBDC is issued.
What are the risks that lawmakers associate with a Federal Reserve-issued CBDC?
Legislators outline multiple risks, including the erosion of financial privacy, the potential for governmental overreach, and a negative impact on innovation in the private sector. Some also equate the issuance of a CBDC with authoritarian regimes, implying that it could be a tool for coercion and control.
What legislative steps are being recommended to manage these concerns?
Lawmakers argue that the authority to create and implement a CBDC should rest with Congress, not with unelected officials. They emphasize the need for comprehensive understanding and authorizing legislation before the Federal Reserve can proceed with the issuance of a CBDC.
Is the concern about a Federal Reserve-issued CBDC a partisan issue?
According to the lawmakers cited, this is not a partisan issue. Representative French Hill emphasized that the authority to create and implement a CBDC lies with Congress and is non-partisan.
How do these U.S. legislators’ concerns compare to the implementation of CBDCs in other countries?
The U.S. legislators specifically cite China’s digital yuan as a cautionary example, implying that CBDCs can be designed in ways that allow for invasive tracking of individual transactions. While not explicitly comparing it to other countries, the concern is that a U.S. CBDC could similarly compromise financial privacy.
More about Federal Reserve CBDC
- Federal Reserve and Digital Currencies
- What is a Central Bank Digital Currency (CBDC)?
- Congressional Digital Assets Subcommittee
- Representative French Hill’s Statements on CBDC
- China’s Digital Yuan and Privacy Concerns
- The 21st Century Dollar Act Explained
- Representative Patrick McHenry on Financial Innovation
- Representative Warren Davidson’s Concerns on CBDCs
- Legislation and Oversight of Digital Currencies
- Financial Privacy in the United States
7 comments
Wow, didn’t realize CBDCs could be this risky. Always thought it was about modernizin the economy or somethin. Makes u think.
Man, anything that hints at a ‘big brother’ state is an instant red flag for me. Need to tread carefully here.
Important article! The concerns over privacy can’t be overstated. We’re heading into uncharted territory folks.
So Congress wants to hold the reins, huh? I get it, but the bureaucracy could slow down innovation too. Its a double-edged sword.
The Feds should stay away from my money, period. Financial privacy is a right not a privilege.
Comparing CBDC to dictatorship? Thats a bit much. But I do get the point about privacy.
Would be interesting to explore the environmental impacts of CBDC vs traditional currencies. Any thoughts?