The president of the FED: a digital dollar to promote the privacy of citizens

The president of the Fed: a digital dollar to promote citizens' privacy - digital dollarFederal Reserve Chairman Jerome Powell hinted at how the United States could place a future digitized dollar that is competitive on the privacy side.

In a recent congressional session, Powell was asked if the Fed was informed about China's progress in developing a central bank digital currency (CBDC).

Powell responded positively, adding that "[China] is in a completely different institutional context. For example, the idea of ​​having a register in which to record citizens' transactions would not be particularly well seen in the United States.

While in China this would not be a problem. " With these words Powell reassured all those who feared having to deal with rules similar to those applied in China, but also with the privacy risks posed by Libra.

"Powell stressed that any digital currency implemented in the United States should preserve privacy or respect privacy, and not provide the government with an additional method of surveillance, as the Chinese government project envisages," said Elizabeth M. Renieris, a member of the Harvard University Berkman Klein Center for Internet & Society.

Privacy as a priority

But Powell was not the first Washington veteran to raise the issue of privacy in the context of a potential digital dollar.

In a recent video interview on the CoinDesk news site, Christopher Giancarlo, former president of the Commodity Futures Trading Commission (CFTC) and now a supporter of an electronic greenback, described a scenario in which a digital dollar is competing with an electronic yuan and Libra.

During the World Economic Forum in Davos, Giancarlo said that in the United States it will be constitutionally prohibited for the government and any operator to record information on citizens' transactions.

"People could see the launch of a digital dollar [US] as a way to keep personal information more secure, and no less, than a central bank currency offered by other governments or commercial vendors," he said.

The race has started

Last year, China kicked off its work on a digitized yuan following the presentation of the Libra project, which Beijing officials specifically indicated as a threat to legal currencies.

Although this claim may be overstated, Powell told lawmakers this week that Libra has indeed exacerbated the need to accelerate the possibilities of CBDCs. But if Libra is actually a catalyst, it shouldn't be a model for Washington, Renieris said.

"Given the highest levels of distrust in Facebook ever, now that it is perceived at the helm of Libra (despite the formal independence of the Libra Association), it would be wise for the Fed to focus on a more respectful approach to privacy towards digital money. to compete with the eye-catching tools Facebook is likely to make available (including ease of use on the platform, the brilliant UX, etc.), "said Renieris.