Reuters reported in November that the New York Federal Reserve Bank and several other major banks launched a 12-week pilot program to test the use of a digital dollar.
The program is the latest step by the central bank to begin its rollout. These efforts also follow the introduction of the eCash Act by Rep. Stephen Lynch, D-Mass. The bill, which was cosponsored by three other Democratic lawmakers but not passed by either chamber, would call on the Treasury Department to take steps toward implementing a digital currency minted by the government.
Using digital tokens representing deposits from customers, the pilot will be testing how those tokens are “settled” through the central bank using a ledger shared by the institutions.
There are also possible privacy issues with a digital currency. U.S. dollars in the form of cash can be used without monitoring. Digital payment systems like apps and credit card leave records, and a digital dollar would likely leave a similar trail.
“This could go drastically in either direction in terms of our privacy rights,” said Lia Holland of the digital rights organization Fight for the Future.
CBDCs would be able to accumulate sensitive payment and user data at an unprecedented scale. In the wrong hands, this data could be used to spy on citizens’ private transactions, obtain security-sensitive details about individuals and organizations, and even steal money.
Currently, payment apps such as Venmo or Cashapp can harvest data about what sort of purchases you make, which can be shared with third parties, often for marketing purposes. Retailers also commonly track specific consumers through online shopping, social media and loyalty programs. When it comes to the U.S. government, the Treasury Department monitors transactions that it suspects are related to terrorist activity, while the IRS requires that taxpayers fill out a special form if they receive more than $10,000 in one or related transactions to guard against financial crimes.
Bob says
Another form of change is upon us . Those of us over 60 with all of the changes in life happened and are happening are just shaking our heads . Like the Geigo chainsaw massacre commercials where the kids decided to hide behind the hanging chainsaws and the murderer is standing behind them shaking his head .
Leonard says
Digital dollars every time a transaction is made a fee is applied so the $100. Sale has a value of $97. The consumer pays more or the seller makes less and the transaction is available for all to see
Stuart Bell says
Only if We The People allow it…