Connecticut House of Representatives member Jim Himes has released a proposal aimed at starting a dialogue about the United States possibly launching a central bank digital currency, or CBDC.
In a white paper released Wednesday, Himes urged Congress to begin exploring the issue of a digital dollar issued by the Federal Reserve to prevent the government from lagging behind in innovations in financial technology. According to U.S. lawmakers, a CBDC “should not be thought of as replacing legacy payment systems and currencies, but as an additional alternative for consumers and businesses.”
The White Paper set out a proposal in which a CBDC could present concerns about transparency, security and privacy compared to fiat currencies. Himes added that any regulatory framework on CBDCs established by Congress “should include strong user identification processes required by intermediaries to certify the identity of wallet holders,” with the Federal Reserve and “participating commercial entities” providing guidance.
“The longer the US government waits to embrace this innovation, the further we will fall behind both foreign governments and the private sector,” Himes said. “It is time for Congress to consider and move forward with legislation that would authorize a U.S. CBDC.”
Various agencies and departments within the U.S. government have been investigating the possible effects of a digital dollar in the event that officials decide to launch one. In May, the Fed published a report concluding that “implementation of monetary policy by a retail CBDC is highly dependent on the initial conditions of the Federal Reserve’s balance sheet.”
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Among U.S. lawmakers, Himes has repeatedly called for congressional action on cryptocurrencies – specifically regarding the technology used to monitor Russia’s potential to escape sanctions – and introduced a section of a bill that has been widely criticized as giving the Treasury Secretary uncontrolled power over certain crypto transactions. Minnesota Representative Tom Emmer also introduced a bill in January aimed at preventing the Fed from acting as a retail bank in the potential issue of a digital dollar, suggesting that lawmakers have not yet reached a consensus on a U.S. CBDC.