A United States Treasury official, Graham Steele, emphasized at a Texas payments conference that when envisioning a potential American CBDC, the concept of anonymity should be taken into account. According to Steele, privacy and the option to conduct transactions without revealing personal information should be key factors to consider during the development of a digital dollar.
During a payments-focused conference in Texas on June 13, Graham Steele, the Assistant Secretary for Financial Institutions at the Treasury Department, discussed the Federal Reserve’s contentious FedNow system and central bank digital currencies (CBDCs). Steele highlighted the difficulty of balancing user privacy and the prevention of illegal transactions when implementing a retail CBDC. He stressed the importance of addressing the issue of user anonymity in the design process.
While sharing his thoughts, Steele assessed the advantages and potential drawbacks of a potential CBDC, stating that it has the potential to foster a “competitive payment environment”. Contrarily, Steele acknowledged that a retail CBDC, backed directly by the Federal Reserve, could offer a secure alternative for consumers during bank runs, thereby mitigating the potential destabilization of private sector lending.
Steele drew attention to the recent banking crisis and highlighted how access to non-deposit alternatives outside the traditional banking system might have altered the dynamics and velocity of bank runs. He mentioned that the United States is still undecided on whether to pursue a CBDC, but a group led by the Treasury is currently assessing the potential implications. This evaluation encompasses various policy objectives related to global financial leadership, national security, privacy, combating illicit finance, and ensuring financial inclusion.
According to Steele, the presence of multiple payment options, such as the FedNow instant payments system, promotes competition and choice in the payments sector. He believes this approach will foster the development of innovative payment services and features, as well as strengthen the resilience of the payments system.
However, there has been opposition to the FedNow system, with political figures like Robert F. Kennedy Jr. and Ron DeSantis expressing concerns that it could serve as a stepping stone towards a CBDC, granting excessive control to the government.