Federal Reserve Governor Michelle Bowman reveals the adoption of a digital United States dollar comes with challenges and tradeoffs regardless of the opportunities that the new financial system could attract. Within a speech on Tuesday, Bowman reveals that one of the leading concerns about the monetary authority digital currency (CBDC) is its whole lot of dangers to privacy.
“In thinking about the implications of CBDC and privacy, we need likewise consider the central role that money plays in our daily lives, and the danger that a CBDC would provide not only a window into, but potentially an impediment to, the freedom Americans enjoy in choosing how money and resources are used and invested.”
Bowman reveals that proper measures should be in place to safeguard the privacy of consumers and enterprises. She reveals the system should likewise be transparent enough to deter criminal activities.
“ We need secure that consumer data privacy protections embedded in today’s payment systems continue and are extended into future systems.
And, a central consideration must be how a potential United States CBDC could incorporate privacy considerations into its design, and what technology and policy options could support a robust privacy framework.”
She reveals privacy concerns will be easier to manage with wholesale CDBC whose use will be restricted to financial institutions than with retail CBDC, which will be accessible to the general public. “ The challenge of privacy could be less difficult to address when it comes to wholesale use cases, in which a CBDC would only be used by traditional financial institutions to conduct a limited range of financial market transactions. As with a lot of these considerations, the purpose and intended function of a CBDC has a major impact on its policy and design considerations.”
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