Recently, nine lawmakers in the United States voiced their concerns over the digital Dollar initiative being developed by the Federal Reserve Bank of Boston. The legislators emphasized that any CBDC in the country must be open, private, and permissionless.
US lawmaker Tom Emmer (R-MN) revealed that he headed an inquiry into Boston’s Federal Reserve CBDC project Hamilton. According to him, the aim was to gain more insight into how far the Fed has gone.
Eight other lawmakers and Emmer had sent an inquiry to the President of Boston’s Fed, Susan Collins. Project Hamilton is an initiative undertaken by the bank in collaboration with the Massachusetts Institute of Technology to develop a digital Dollar.
In the letter, Emmer stated that some companies were taking part in the initiative plan to design another CBDC using government resources. According to Emmer, these entities will sell the CBDC to commercial banks.
Emmer rebuked such entities emphasizing that the US CBDC must be private, permissionless, and open. Additionally, he opined that Boston’s Fed CBDC must be built on transparency.
Transparency would ensure the CBDC does not violate the privacy of users. He cited the ongoing privacy violations citizens are facing in China.
Furthermore, the lawmaker stated that Project Hamilton lacks transparency, especially concerning the Fed’s dealings with private companies.
Specifically, the letter inquires about the project’s funding and dealings with private firms. It also asks the Fed about its plans to address the financial and privacy risks associated with CBDCs.
Unfair Privileges For Participating Firms
Meanwhile, the letter noted that firms participating in Project Hamilton must not receive any unfair advantage. An unfair advantage could place them above future or current competitors.
Also, the letter said an unfair advantage could pose great sovereignty and privacy risks to the people of America. “The Federal authorities and Federal Reserve Banks have no business choosing winners or losers in the private market,” the letter stated.
The recent letter comes after Congressman Emmer filed a measure in January on the issuance of CBDC. The legislation would make it illegal for the Federal Reserve to issue a CBDC to individuals directly.
“It is crucial to underline that the US Fed does not and should never have the jurisdiction to provide retail bank accounts,” Emmer wrote. Recently, New York’s Federal Reserve Bank finished the first system of its digital Dollar initiative, Project Cedar.
According to the reports, New York’s Federal Reserve has partnered with nine leading banks to work on a proof-of-concept project. The project will explore the possibility of creating a payment system.
Also, this system will help facilitate virtual asset transactions on a wholesale level.
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