As the public awaits the Federal Reserve's report on a potential central bank digital currency, one member of Congress aims to block such a CBDC from linking the public to the Fed directly.a bill to prohibit the Fed from issuing a CBDC directly to individuals. The bill itself is quite brief, with its central text amending the Federal Reserve Act to include the following:
"Except as specifically authorized under this Act, a Federal reserve bank may not offer products or services directly to an individual, maintain an account on behalf of an individual, or issue a central bank digital currency directly to an individual.’" In a statement, Emmer said that"the Fed does not, and should not, have the authority to offer retail bank accounts." Emmer specifically cited concerns over the security of customer data, as well as longstanding fears that the Fed would use such access to surveil US citizens and their transactions.testified before the Senate Banking CommitteeCurrently, banks can hold master accounts with the Fed.
The prospect of a CBDC has opened up the possibility of individuals having accounts with the Fed. Indeed, such"FedAccounts" appeared briefly in the legislation behind the Covid-19 stimulus package in the spring of 2020, aiming to allow people to use post offices to make withdrawals and deposits. That proposal was later stripped out.
In addition to surveillance concerns, Republicans typically argue that the Fed simply cannot handle those sorts of demands on its systems, while private financial entities are already used to them. As Emmer said in a Twitter:"It is important that the United States lead with a posture that prioritizes innovation and does not aim to compete with the private sector." Progressive Democrats, meanwhile, see this as protectiveness over commercial banks.
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the reality is that all centralized collateral-backed stablecoins depend on the Fed (specifically Fedwire) to operate. so if their promoters think the RTGS can't handle retail flow then neither can anything that directly relies on the RTGS.
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