 |
| link |
Better late to learn of MN CD6 Rep Tom Emmer serving the hustings by asking, with colleagues, a patently obvious question. Boston Fed and MIT collaborated in a "Project Hamilton" regarding potential implementation technology, dimensions and concerns over a possible CBDC:( "Shuttering," i.e., termination/completion of Project Hamilton being noticed online as posted Dec. 23, 2022; i.e., days ago.)
First, wtf is a CBDC readers might ask. CBDC is an acronym, for Central Bank Digital Currency. Two links: a generic CBDC websearch gives CBDC background, while this link is specific to "Project Hamilton" web content.
From there interested readers can do further research.
Next - Your Whitehouse at work for you, (by consideration of CBDC questions and potential in the context of a linked Sept. 2022 multi-page pdf government report), per a seemingly innocuous Sept. 2022 whitehouse.gov posted notification stating in part:
Digital assets R&D agenda
Following a recommendation in the report, OSTP and the National Science Foundation will lead an interagency effort to develop a National Digital Assets Research and Development (R&D) Agenda. This agenda will place a high priority on advancing research on topics like cryptography that could be helpful to CBDC experimentation and development at the Federal Reserve. This agenda will also cover topics less related to CBDCs; for example, working with consumer protection experts, it might support innovations that increase financial inclusion and equity in the digital assets ecosystem without placing already-financially vulnerable communities at greater risk.
This R&D agenda will take an whole-of-government approach, consistent with the President’s directive to place the highest urgency on R&D efforts related to CBDCs, as well as the fiscal year 2024 budget priority that requests that Federal departments and agencies collaborate on critical and emerging technologies, including financial technologies. This will help bring the Federal Government’s resources and expertise to bear on hard questions related to digital assets.
This report helps advance the mission of the White House Office of Science and Technology Policy, which is to maximize the benefits of science and technology to advance health, prosperity, security, environmental quality, and justice for all Americans. The American people deserve to fully benefit from technological possibilities like a U.S. CBDC, while being protected from the harms it could bring.
We look forward to continue advancing President Biden’s priorities on digital assets.
So that is clear proof of an agenda in motion, presently, and those last two paragraphs bring to mind Reagan's aphorism about, " I'm from the government and here to help you," being words of dread.
The Emmer-McHenry letter, online and by web capture - READ IT:
 |
| click each image to enlarge and read |
Those questions are important. Whose private sector participation happened? Has that led to private parties having some future regulatory advantage? What is this intended to lead into?
In effect, the project happened, it was somehow funded and coordinated among the players - so who are the players besides MIT and Boston Fed?
What is of major concern, that such key information was not published up front by MIT and Boston Fed, to where Congressmen had to ask. With the obvious ramifications of benefit to those taking part, information is power, and power and information can have major monetary advantage.
Whose game? That is the question. MIT and Fed people come and go, the door revolves and start-ups happen in the regular course of business. But this effort transcends the regular course of business. Funding can have wrinkles. What's up?
Now you know a bit about what's happening, a caveat. This is something Crabgrass is learning more and more about via looking into the FTX - SBF collapse with underlings turning into plea bargainers and all, SBF on an airplane to the U.S. before that "cooperation" was made public - plus crypto hype,CBDC movements, the MetaMask app-scam - - - with all that where the learning curve is steep and Crabgrass not claiming any special expertise in learning while posting.
Caveat emptor is one pole of worry per an unregulated crypto world, while tight centralized digital money poses its own other threats as the other pole. You need a trustworthy product if it is to be a help; but trusting the Fed, (run after all by bankers and the government primarily for the health and well being of bankers - and coincidentally of course, for softening business cycle woes for the public too), has its own privacy worry with direct cash dealings fading and traceable digital dealings being a thicket of "big government" worry.
Crypto was on the ropes before FTX went splat in its Nov. 2022 bankruptcy filing, with that whitehouse.gov stuff getting out a Sept. 2022 notice to curiously precede the splat by mere months. And -
That whitehouse.gov posting links to an Executive Order 14067, which regular citizens at the time never heard of, and two official published online study writeups: six pages on CBDC policy objectives; fifty-eight pages on CBDC technical aspects.
And that was September, this year. Months before FTX went splat. Months after the cryptocurrency bubble burst, this spring, with crypto values plunging.
Coincidences are of interest, including SEC handling of its own crypto-related agenda, prior to the FTX collapse. (That being its own story deserving its own post.) And an interagency task force executive thing, an Executive Order, posted but not made a hot media coverage thing while we mere citizens know nothing of whether there was White House specific notice to and involvement of the Congressional Blockchain Caucus, as the White House went about its various moves in forming a CBDC agenda.
The Emmer press release from which the Crabgrass headline quotes, is online here. In part, it notes:
Congressman Tom Emmer (MN-06), the Ranking Republican on the House Financial Services Subcommittee on Oversight and Investigations, led a letter with Ranking Member Patrick McHenry (NC-10) to Susan Collins, President of the Federal Reserve Bank of Boston, about “Project Hamilton,” an initiative to research the development of a central bank digital currency (CBDC).
A central bank digital currency is a programmable digital currency issued from a federal reserve. 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.
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 said, “Any U.S. CBDC must be open, permissionless, and private.”
“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 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,” Emmer concluded.
[...] Emmer has long expressed concern about the implementation of a U.S. CBDC. In January, Emmer introduced a bill to prohibit the Federal Reserve from issuing a CBDC directly to individuals. You can read more about that bill here.
[italics added]
Having a Blockchain Caucus seems a public good, with there being multiple flavors of blockchain, as well as multiple potentials. Emmer appears still as enthusiastic about blockchain and as cautious about CBDC as he was before the FTX collapse, which might be a good thing. Opinions differ.
All I know is what I read on the Internet.
_________UPDATE________
One paragraph from the Emmer press release issued to give notice of the letter to the Boston Fed -
A central bank digital currency is a programmable digital currency issued from a federal reserve. 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.
That is not entirely clear re "transparency" yet still a heavily loaded thought. Link. Wikipedia. Wired, in anecdotal story form, from Dec. 2017. Indications are consolidation of centralized government systems in China since 2017.
Where we in the U.S. might be along that road is a separate story, as in the E.U., but the China allusion is sobering. Whether we need a CBDC to get there or not, we are on a trajectory where a tightly monitored CBDC blockchain implementation might assist the trajectory, so that it is proper for Emmer to suggest concern, e.g., buying an over the counter medication at a CVS outlet for cash vs on a to-be-implemented tracking and storage system related to a Fed issued CBDC with overreaching capability. More than minimally needed to provide security, reliability, and trust would be too much. Or is the worry only if you have something clearly wished to be hidden?
Presume that MIT - Boston Fed utilized funding and extended design help from a credit scoring firm with a big growing database. Does that change how you regard the Emmer inquiry or attention? Whether blockchain implementations can be formulated with less anonymity than bitcoin's is a technical question Crabgrass cannot presently answer, the guess being they can, and "money laundering" and "terrorism" are topics pulled out and waved at us if we think where in our lives anonymity might be a benefit to pursue. You're not a terrorist or money launderer, so - Since you're not one of the bad guys, why should you worry? Eh?
FURTHER: Atlanta Fed, re retail payments in cash.
_________FURTHER UPDATE________
Emmer text quoted in the headline, " . . . regarding the dangers a CBDC could pose to financial privacy and financial freedom, which were the subject of over 65% of the letters in response to the Fed’s January 2022 report on CBDCs."
The suggestion of that 65% datum that privacy matters are important to people is hard to deny.
BACKGROUND: That January 2022 report is online here. A Fed intro notice, here, states:
The paper summarizes the current state of the domestic payments system and discusses the different types of digital payment methods and assets that have emerged in recent years, including stablecoins and other cryptocurrencies. It concludes by examining the potential benefits and risks of a CBDC, and identifies specific policy considerations.
Consumers and businesses have long held and transferred money in digital form, via bank accounts, online transactions, or payment apps. The forms of money used in those transactions are liabilities of private entities, such as commercial banks. Conversely, a CBDC would be a liability of a central bank, like the Federal Reserve.
While a CBDC could provide a safe, digital payment option for households and businesses as the payments system continues to evolve, and may result in faster payment options between countries, there may also be downsides. They include how to ensure a CBDC would preserve monetary and financial stability as well as complement existing means of payment. Other key policy considerations include how to preserve the privacy of citizens and maintain the ability to combat illicit finance. The paper discusses these and other factors in more detail.
To fully evaluate a potential CBDC, Money and Payments: The U.S. Dollar in the Age of Digital Transformation (PDF) asks for public comment on more than 20 questions. Comments will be accepted for 120 days and can be submitted here.
That comment period has ended, and 65% of the comments were alluded to by Emmer.
FURTHER: Bloomberg, up to the subscription wall, reports -
That suggests that interbank transactions are the more immediate consideration over a CBDC for the general public, while the impact of cryptocurrency failure events might end up having an acceleration effect upon central bank takeover of the market space, with/without decentralization and anonymity. Readers - Guess at it.
FURTHER: From https://www.federalreserve.gov/econres/feds/files/2022032pap.pdf
The lead page title and abstract:
Retail CBDC and U.S. Monetary Policy
Implementation: A Stylized Balance Sheet Analysis
Matthew Malloy, Francis Martinez, Mary-Frances Styczynski, and Alex Thorp - April 2022
Abstract
This paper discusses how a Federal Reserve issued retail central bank digital currency (CBDC) could affect U.S. monetary policy implementation. Using a stylized balance sheet analysis, we analyze the effect a retail CBDC could have on the balance sheets of the Federal Reserve, commercial banks, and U.S. households. Then we consider how these balance sheet changes could affect monetary policy implementation for the Federal Reserve. We illustrate that the potential effects on monetary policy implementation from a retail CBDC are highly dependent on the initial conditions of the Federal Reserve’s balance sheet. Moreover, the analysis demonstrates how the Federal Reserve may use its existing tools to manage the effects of a retail CBDC on monetary policy implementation.
FURTHER: Cato Institute is firmly against a CBDC and especially if it would involve Fed or Treasury getting into retail banking with regular citizen accounts. The belief is that banking is a private sector privilege not to be preempted by government.
SEE, This pdf report from Cato Institute, "Central Bank Digital Currency: Assessing the Risks and Dispelling the Myths - In the case of a CBDC, however, the digital dollars would be a liability of the central bank itself." November 18, 2022 • Working Paper No. 70" -- By Nicholas Anthony and Norbert Michel
Readers might need to face a "not a robot" capcha, here, to get to the pdf. The report's abstract:
Central bank digital currencies, or CBDCs, have the potential to radically transform the American financial system. They are no longer merely academic musings. Rather, CBDCs have gained the attention of politicians, central bankers, the tech industry, and even the broader public. Government officials, in the United States and abroad, are now actively working to implement CBDCs and solidify government control over payments systems. But this experiment should be left on the drawing board because CBDCs ultimately usurp the private sector and endanger Americans’ core freedoms. They have no place in the American economy. Congress should explicitly prohibit the Federal Reserve (the Fed) and the Department of the Treasury (Treasury) from issuing a CBDC in any form.
One of the report's authors expressed comparable thinking in an extensively linked Forbes op-ed dated Dec. 15, 2022.
