Last year, Grey helped author a US House bill called the Electronic Currency and Secure Hardware Act (ECASH). “I think anonymity is a social good,” he says. No one can trace how you spend your coins and bills. The Federal Deposit Insurance Corporation estimates that in 2021, 5.9 million US households were “unbanked.” Besides that, Grey argues, cash has unique “social features” that we should be careful to preserve, including its privacy and anonymity. In the US, plenty of people rely on bills and coins because they don’t have bank accounts and can’t get credit or debit cards. That we can’t use cash on Amazon is only one argument for government-issued digital cash, says Grey. The solution is a digital currency with all the features of physical cash, according to Willamette University law professor Rohan Grey. The decline of cash is a primary reason more than 100 countries are researching the idea of creating their own digital currencies. Outside the US, things are even further along the road to a cashless society. In the US, cash payments represented just 18% of all payments in 2022-down from 31% in 2016, according to research by the San Francisco Fed. That’s in part out of convenience, but there’s another big reason: you can’t use cash to buy things on the internet. On top of that, consumers are simply choosing to use less cash. Fewer and fewer vendors are accepting bills and coins. What purpose would a government-issued digital currency serve other than to give the government a tool for financial surveillance and control?īut there is a problem-probably one that you’ve noticed yourself. Libra failed to launch a global digital currency run by a tech company is no longer an issue. If you paid with a debit card recently, did you not pay with digital dollars? China’s move to pilot a consumer central bank digital currency is not reason by itself to pursue one, they argue. Opponents of a hypothetical US CBDC cast it as a solution in search of a problem. Now the sort of technical design research that Project Hamilton exemplified may have to come from outside the central bank, which prefers to remain politically neutral.Īnd a digital dollar looks less likely than ever before. But late last year, shortly after the project came under scrutiny from anti-CBDC legislators, the Boston Fed ended Hamilton. Hamilton’s first phase demonstrated a feasible technical approach, and the researchers promised a “Phase 2” that would explore sophisticated approaches to privacy. Project Hamilton’s goal was to build and test a prototype of just one component of a potential system: a way to securely and resiliently handle the same quantity of transactions that the major payment card networks process. How one might work-including how closely it might imitate physical cash-is still a wide-open question that can only be answered through research and testing. Not only does the Fed have no plans to issue a digital currency, but it has repeatedly said it wouldn’t do so without authorization from Congress. In campaign speeches, DeSantis has described a dystopian future in which the government uses its CBDC network to block people from buying guns or fossil fuel. “Anyone with their eyes open could see the danger this type of arrangement would mean for Americans who … would like to be able to conduct business without having the government know every single transaction they’re making in real time,” Florida governor Ron DeSantis, who is running for the Republican nomination for president, said in May.
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