In a move that has sparked lively discussion among experts and enthusiasts, the U.S. Federal Reserve has firmly stated that its latest initiative, FedNow, is not intrinsically linked to the digital asset sphere. However, the sophisticated system may inadvertently pave the way for the necessary infrastructure required by a potential CBDC (Central Bank Digital Currency) in the U.S, prompting fresh concerns over privacy and control around a potential digital dollar.
Aired this past week, FedNow expedites payments in the U.S to almost instantaneous, vastly outpacing the previous system, which took hours or even days. For many cryptographic currency advocates, the launch of FedNow is considered a form of affirmation, as quick, easy, and ceaseless payments align with the goals of the digital asset industry. Regardless of regular banking hours, FedNow provides an uninterrupted 24-hour service.
Although categorically not a digital token or a CBDC, Bianco Research president, Jim Bianco, proposed that it provides a platform to facilitate the creation of a CBDC. Yet, parallels can be drawn between the concerns surrounding FedNow and those that shadow the ongoing development of CBDCs.
Certain political leaders, predominantly within the Republican party, fear the possibility of surveillance or censorship of transactions by authority figures in the case of a CBDC. Florida Governor and GOP presidential hopeful, Ron DeSantis, has publicly protested that the advent of a CBDC would promote a “government-sanctioned surveillance,” and has pledged to prohibit one if elected.
Drawing on these concerns, CoinRoutes CEO and co-founder, Dave Weisberger, predicted a bleak outlook if FedNow evolves into a programmable CBDC. This could allow withholding payment for government-disapproved items or services or even excluding perceived threats from the financial system. While such moves sound farfetch, the dystopian society they might create cannot be dismissed outright.
Despite the criticism, Jerome Powell, the Fed chair, has consistently praised the exploration of a government-issued digital currency. The concept is gaining international acceptance as evidenced during the recent G20 Summit in India. Among the reports published was one by The Bank of International Settlement, detailing the benefits of a CBDC and discussing central banks’ preparedness for its implementation.
However, achieving balance might prove challenging as governing bodies grapple over control of the digital tokens. Bianco suggests that censorship and permissioning might be commenced based on person-type and transaction-type. This is of concern to banks as well, who see FedNow, financed through taxpayer money, as lacking governmental structure or an apparent business plan.
Adding an ironic twist to the narrative, the skepticism of blockchain pioneers and banking giants, are united in their dubious regard for FedNow. Bitcoin was conceptualized as an alternative to the heavily regulated traditional financial system, and the potential Orwellian agenda from digital currencies like CBDCs perceived to bypass this freedom resonates with concerns of crypto enthusiasts. A balanced, equitable solution for everyone involved remains elusive.
Source: Coindesk
