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A ‘potential retail CBDC’ should consider privacy, a Treasury official said


Graham Steele, a representative for the US Department of the Treasury, advised attendees at the Texas payments conference that a future CBDC in the United States must consider privacy.

According to representatives of the US Department of the Treasury, the design of digital dollars must take into account privacy and the capacity for anonymous transactions.

Graham Steele, assistant secretary of financial institutions at the Treasury Department, discussed the controversial central bank digital currency (CBDC) and FedNow system during a June 13 speech at a payments conference in Texas.

Retail CBDC’s struggle, according to Steele, is to reduce unlawful transactions while upholding customer privacy. He stated that it remains to be considered how to protect user anonymity:

In order to provide such protection in any prospective retail CBDC architecture, it is important that we consider the extent to which privacy and anonymity can be maintained and investigate available technologies and approaches, including Privacy Enhancement Technologies.

Steele assessed the advantages and disadvantages of a potential CBDC in his remarks, noting that it could foster a “competitive payment environment.”

Retail CBDCs, on the other hand, will be backed directly by the Fed and may offer customers a safer alternative so long as the bank is running, which, according to Steele, could “destabilize private sector lending.”

Using the recent banking crisis as an example, he claims that “access to non-deposit alternatives outside the banking system may have changed the nature and speed of bank runs.”

He noted that although a Treasury Department-led group is analyzing the ramifications of a potential CBDC in the country, the US “has not yet determined whether to pursue a CBDC.”

According to Steele, the assessment looks at β€œpolicy goals related to global financial leadership, national security, privacy, illicit finance, and financial inclusion.”

Regarding FedNow Fed’s instant payment system, Steele feels that having a variety of payment methods “increases choice and competition in payments”, which in turn will spur “the development of new payment services and features” and increase the resilience of the payment system.

Politicians have responded negatively to FedNow. Presidential candidates Ron DeSantis and Robert F. Kennedy Jr. opposed the system because they believed it would pave the way for CBDCs, which they both believed would give the government excessive authority.

Michelle Bowman, governor of the Federal Reserve Board, stated in April that it was “difficult to imagine” that a CBDC could be justified for anything other than “interbank and wholesale transactions.”

‘Potential retail CBDC’ posts should consider privacy, says a Treasury official who first appeared on BTC Wires.


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