US Rep. Tom Emmer (R-Minn.) proposed the two-page bill on Wednesday and shared a series of Tweets outlining his concerns with the potential launch of a Central Bank Digital Currency (CBDC) in the US. 

The Rep. from Minnesota highlighted that a US CBDC implementation should ensure it “protects financial privacy, maintains the dollar’s dominance, and cultivates innovation.” But he also warned that a CBDC model raises “single point of failure” issues and could move the US in the direction of digital authoritarianism if it lacks the privacy elements of cash.

Emmer also raised issues with what the implementation of a CBDC would mean for the role that Central Banks play. He argues that they would assume extensive and unwarranted liabilities and potentially become what could be considered a commercial banking entity. The use of a CBDC would also give them the ability to collect personal information from citizens and track all transactions.

Other critics of CBDCs also argue that the ability to have "programmable money" would give Central Banks the ability to “delete” citizens money, automatically impose fines, and impose limitations on how or when a CBDC is spent. 

CBDCs versus Bitcoin

A CBDC is a digital form of fiat currency that is distributed by a nation, usually its Central Bank. It functions similarly as money on banking rails but many believe that the implementation of a CBDC may obsolete banks and look to eliminate and replace cash, giving the issuing nation an abundance of control and insight into individual citizens' finances.  

While using a CBDC, user payments may be distributed, tracked, and governed by a centralized body of individuals. This is in stark contrast to bitcoin circulating on the Bitcoin network which is decentralised. Bitcoin transactions may also be tracked but the identity behind each transaction is not known unless the user identifies themselves to wallets attached to each transaction. Bitcoin is currently an opt-in monetary network throughout the world whereas a CBDC would still be fiat money, mandated by decree, regardless of its new digital form.

The Ideal CBDC for the US

Emmer proposes that an ideal CBDC would be: accessible to all, transactable on a blockchain that is transparent to all, and that it maintains the privacy elements of physical notes and coins.  He goes on to highlight that the US must prioritize innovation rather than compete with the private sector and that any blockchain implementations must be carried out with American characteristics. 

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