Public comments solicited by the Federal Reserve on a potential central bank digital currency (CBDC) are now available for public review, completing the first step in an unfolding evaluation process the Fed describes as a "broad consultation" with specialists and everyday people.
Atlanta Fed president and CEO Raphael Bostic. Photo by David Fine.
Atlanta Fed President Raphael Bostic said in a May 10 keynote address at the annual Financial Markets Conference this package of comments is of special interest to him because it contains remarks submitted by individuals outside the industry.
"I'm more interested in what the nonadvocates write about and comment on, than the advocates," Bostic said. "I kind of know where they're going to be. It's where everyone else is. Because if we're going to do this, there are a lot of other folks who have a role to play."
The public comments are posted in a set of seven packages, as of the June 7 update. The responses were requested in a paper issued by the board in January and present an unabridged snapshot of opinions of a potential CBDC. Some comments contain obscene remarks. Some are long and technical. Some are plainspoken.
"I'm more interested in what the non-advocates write about and comment on, than the advocates. I kind of know where they're going to be."
Raphael Bostic, Federal Reserve Bank of Atlanta
Here are four selections, chosen randomly from responses that provided the author's name, industry, and state. These comments (using the respondents' initials) respond to the first question on the survey: "What additional potential benefits, policy considerations, or risks of a CBDC may exist that have not been raised in this paper?"
- J.G., technology company, Wisconsin: "A digital currency, if implemented with moral design principles, could be a powerful tool for markets and a promoter of equality and justice in America and the world."
- R.B., individual, California: "There are no benefits to a CBDC. It's a tremendously scary proposal whereby the government would control all private monetary assets."
- L.K., academia, Ohio: "Create CBDC."
- A.O., technology company, New Hampshire: "Centralized control with a digital currency system could usher in a new type of potential tyrannical abuse like this world has never seen if the wrong person wished to do so."
Bostic's remarks on May 10 touched on this last point. Privacy is a significant concern in any potential CBDC that has the capacity to monitor where consumers spend money, Bostic observed.
"If we're going to have a currency out there, how do we track it to make sure the money supply is managed? And if you're going to track it, [then] we [would] have the ability to track where consumers deploy this money," Bostic said. "There are implications for information, privacy, for all these sorts of things—cybersecurity—all these issues. And for a number of them, we [the Fed] don’t have authority to decide. We don't get to set privacy policy."
"At the end of the day, the job of the Federal Reserve is to make money safe and efficient."
Robert Bench, assistant vice president, Boston Fed Secure Payments group
Robert Bench, assistant vice president, Boston Fed. Photo courtesy of the Boston Fed
This general issue of privacy and security also arose June 10 during a webinar hosted by David Lott, a payments risk expert with the Atlanta Fed's Retail Payments Risk Forum, with Robert Bench, an assistant vice president in the Boston Fed’s Secure Payments group. The purpose was to present an update on Project Hamilton, the ongoing research project into CBDC's technical challenges and opportunities the Boston Fed is conducting with the Massachusetts Institute of Technology. A listener asked if Bench expects that the processing rate of more than one million transactions a second achieved in the modeling process could be replicated in a real-life situation. Probably not, Bench replied, because security measures that would be built into the operating system likely would reduce the processing speed.
Bench compared the processing speed of transactions in a lab setting to the performance of a racecar on a closed racetrack. Both are fast, but neither is intended for real-life situations. "At the end of the day, the job of the Federal Reserve is to make money safe and efficient," Bench said.
David Pendered
Staff writer for Economy Matters