United States Treasury official Graham Steele spoke at a payments-focused conference in Texas about the Federal Reserve’s controversial FedNow system and central bank digital currencies (CBDCs). Steele said one challenge of a retail CBDC is minimizing illegal transactions while maintaining user privacy.
Steele emphasized the importance of considering privacy and anonymity in the design of a potential retail CBDC. He suggested exploring the use of Privacy Enhancing Technologies to enable such protections.
In addition, Steele weighed the benefits and risks of a CBDC, suggesting that it could promote a competitive payment environment while also providing a safer option for consumers during bank runs. However, he also noted that a CBDC backed by the Fed could destabilize private sector lending.
The US has not yet decided whether to pursue a CBDC, but a Treasury-led group is evaluating the implications of one. The evaluation includes examining policy objectives related to global financial leadership, national security, privacy, illicit finance, and financial inclusion.