The U.S. Congress may be well on its way to discussing a potential rollout of the official digital dollar. Connecticut state representative Jim Himes has proposed a bill. Which would begin the discussion on the use of a federal bank digital currency (CBDC).
A CBDC “should not be thought of as replacing legacy payment systems and currencies but as an additional alternative for consumers and businesses,” according to the U.S. legislator.
Digital dollar under strong regulation
Himes encouraged Congress to study the creation of a CBDC the Federal Reserve printed in a white paper published on Wednesday. Which he also said is necessary to keep up with financial technology.
When compared to fiat currency, a CBDC could raise concerns about transparency, security, and privacy, according to the white paper. Himes went on to say that any CBDC regulatory framework passed by Congress should contain “strong user identification processes that require intermediaries to certify the identity of wallet holders,” as well as guidance from the Federal Reserve and “participating commercial entities.”
“The longer the United States government waits to embrace this innovation, the further we 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.”
Apprehensions surrounding U.S. CBDC
In case officials decide to introduce a U.S. CBDC, various departments and agencies within the U.S. government have investigated its potential consequences. In a paper published in May, the Fed came to the conclusion that the initial conditions of the Federal Reserve’s balance sheet are significantly dependent on the implementation of monetary policy from a retail CBDC.
As evidence that lawmakers have not yet come to an agreement on a U.S. CBDC, Minnesota Representative Tom Emmer submitted a bill in January. It would forbid the Fed from functioning as a retail bank in the possible issuance of a digital currency.