U.S. Treasury Explores Privacy Measures for Digital Dollars and More
Senior official Graham Steele expresses caution regarding the potential risks associated with running a central bank digital currency as the Treasury Department examines the concept while also considering privacy concerns.
Because Bitcoin
June 13, 2023
Assistant Secretary Graham Steele spoke at the Transform Payments USA conference in Austin, Texas, about the digitization of financial services. The US Treasury published a new press release about it today.
He highlighted the digitization trend in the financial sector and discussed significant developments such as the forthcoming launch of FedNow, Central Bank Digital Currencies (CBDCs), and Open Banking. Steele emphasized the potential impacts of these developments on consumer privacy, financial inclusion, fraud prevention, and the changing roles of financial firms.
He provided insights into FedNow, emphasizing its real-time settlement capabilities and the benefits of having multiple payment operators. Steele also discussed international experiences with faster payment systems and highlighted the need for risk management and fraud prevention in faster payments.
Regarding CBDCs, Steele mentioned that the United States has not yet decided to pursue a CBDC but acknowledged the ongoing evaluation of policy objectives related to global financial leadership, national security, privacy, illicit finance, and financial inclusion. He emphasized the importance of striking the right balance in CBDC design, considering competition, financial inclusion, and risks such as potential bank runs and user privacy. Offline capabilities and technologies like Privacy Enhancing Technologies (PETs) were also mentioned as important considerations in CBDC design.
Steele touched on the topic of Open Banking, highlighting the need for a balanced approach in consumer data sharing frameworks. He mentioned the European example of secure data sharing standards and the concerns over privacy and security risks in the fintech industry. He noted the transition away from screen-scraping and the importance of secure data sharing methods like tokenized API access. Steele mentioned regulatory actions, such as third-party risk management guidance and the CFPB's Section 1033 rulemaking, to provide clarity and security in the data sharing landscape.
Conclusion
In conclusion, Steele emphasized the benefits and challenges of the digitization of financial services. He called for a balance between industry leaders and policymakers to ensure that this transformative moment in payments addresses the shortcomings of the current system.
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