Concerns about the digital currency initiative being run by the Federal Reserve Bank of Boston have been voiced by nine US politicians. “Any U.S. CBDC must be open, permissionless, and private,” the lawmakers emphasized.
Tom Emmer, a Republican from Minnesota, said on Thursday that the Federal Reserve Bank of Boston’s central bank digital currency (CBDC) initiative is the subject of his investigation.
Emmer and eight other members of Congress expressed their concerns about Project Hamilton, a project to create a U.S. CBDC in partnership with the digital currency initiative at the Massachusetts Institute of Technology, in a letter to Susan Collins, president and CEO of the Federal Reserve Bank of Boston.
“It has come to Congress’s attention that some firms participating in Project Hamilton intend to use government resources from the project to design a CBDC with the intent to then sell those products to commercial banks,” Emmer described, emphasizing:
Any U.S. CBDC must be open, permissionless, and private. The unfair advantage that some private companies could enjoy from this partnership and the failure to ensure the principles of privacy, sovereignty, and free markets should be concerning to every American.
“If the CBDC is not crafted with the values of transparency in mind, the currency falls at risk to the financial privacy violations currently on display in China,” he stressed.
“The more we learn about the Boston Fed’s work on Project Hamilton, the more we have become concerned with the lack of transparency, especially as it relates to their partnership with the private sector,” the congressman continued.
The Fed’s plans to address concerns regarding the risks a CBDC could pose to financial privacy and financial freedom are also addressed in the letter, which specifically inquires about Project Hamilton’s funding and engagement with the private sector.
“It is important that the firms engaging with Project Hamilton do not receive unfair competitive advantage over current or future competitors. Neither the federal government nor the Federal Reserve Banks should be in the business of picking winners and losers in the private markets,” the letter concludes.
Emmer introduced a bill in January that would forbid the Fed from issuing digital currency to private citizens directly. “It is important to note that the Fed does not, and should not, have the authority to offer retail bank accounts,” he emphasized at the time.
The first stage of Project Cedar, the Federal Reserve Bank of New York’s experiment with the digital dollar, was finished earlier this month. On a “proof-of-concept project to explore the viability of a theoretical payments system which would facilitate wholesale digital asset transactions,” the New York Fed is currently working with nine major banks.
