Fed Chairman Confirms That A US CBDC Would Not Be Anonymous• September 29, 2022 9:29 pm • Comments
It seems that Federal Reserve chairman Jerome Powell just revealed that any future central bank digital currency within the US would not be anonymous.
In fact, he even stated that the key trait of a CBDC is that the identity of the user would actually be verified which would mean that there would be no privacy at all.
Of course, this goes against a general trait of many other cryptocurrencies where there is an emphasis of anonymity.
So far, the Fed has not yet confirmed the creation or implementation of a CBDC, but many are speculating that something is already being planned.
JUST IN: 🇺🇸 FED Chair Jerome Powell says a US CBDC "would not be anonymous." pic.twitter.com/6IhHytMOuM
— Watcher.Guru (@WatcherGuru) September 27, 2022
While the Fed is yet to make any decisions on whether to proceed with a CBDC, it has been actively discussing what one might look like, and its potential risks and benefits.
Powell said that a CBDC would be guaranteed to have four characteristics: Intermediation, privacy protection, interoperability, and identity verification.
“It would not be anonymous,” he clarified. “It would not be an anonymous bearer instrument.”
Powell added that this would require finding a “balance” between privacy protection and identity verification, which is already done in today’s traditional banking system.
“Privacy” refers to the ability to have others unable to observe one’s actions. By contrast, anonymity means one’s actions are observable, but nobody knows who is behind them.
In some ways, cryptocurrencies like Bitcoin can be considered “anonymous” because the protocol does not collect identifying information from users interacting with the network. However, it lacks privacy because its ledger of transactions is publicly transparent.
With that being said, if the Fed ever hopes of releasing an actual CBDC in the future, Powell mentioned that the central bank would need the approval from Congress.
So far, there are a number of Congress members that are against the issuance of a CBDC while there are others that are in support of it as many other countries are already testing the concept.
European Central bank chief Christine Lagarde also made a few comments on CBDCs and stated that central banks could become relevant if they didn’t get involved in CBDCs.
This is despite the fact that Lagarde still views digital assets like Bitcoin to be speculative assets that have no future.
The central bank digital currency (#CBDC), or digital dollar, would not be anonymous, according to @FederalReserve Chairman Jerome Powell—thereby eliminating one of the main advantages of using a #Cryptocurrency. https://t.co/TMEe2M21Jr
— The Epoch Times (@EpochTimes) September 28, 2022
Christine Lagarde – Chief of the European Central Bank (ECB) – has expressed similar views on the topic, believing Bitcoin to be a “highly speculative asset” with no future.
However, during Tuesday’s discussion, Lagarde suggested that central banks risk becoming irrelevant if they don’t pursue development on CBDCs.
“If we are not involved in experimenting and innovating in terms of digital central bank money, we risk losing the role of ‘[monetary] anchor’ that we have played for many many decades.”
Lagarde echoed predictions from Fed vice chair Lael Brainard in May, suggesting that the rise of private market currencies could usher in a return to the “free banking” of the 19th century. “That precipitated crisis after crisis,” Lagarde argued.
— Bitcoin News (@BTCTN) September 29, 2022
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