Executive Order 14067 to direct research into the creation of Central Bank Digital Currencies

Mark Reinhardt- Boise Idaho As of this year, President Joe Biden signed Executive Order 140671, directing the Federal Reserve System, to research Central Bank Digital Currencies. This was done through a joint initiative of the Boston Federal Reserve and MIT called, “Project Hamilton.”2 Named after the first Treasury Secretary of the United States of America, who also was one of the authors of the Federalist Papers. In a report issued by the White House Office of Science and Technology3, “This report does not make any assessments or recommendations about whether a U.S. CBDC should be pursued.” It wrote a paragraph discussing the feasibility of implementing the system if it were deemed to be in the national interest. The report makes mention that Federal agencies would have to realign its process and methods for its systems to work with the CBDC’s. Addressing access to the system for marginalized groups, it makes mention that offline capability should be incorporated, and the role of cash should be preserved. As of June 10th, the Federal Reserve Bank of Atlanta posted a webinar on Project Hamilton to its YouTube Page, explaining things in more detail. Project Hamilton’s source code is listed as Open Source on Git Hub, according to the Boston Federal Reserve website. The United States Treasury Department defines a payment system as, “a set of rules and processes for transferring money.” The report from the Treasury Department defining payment systems titled, The Future of Money and Payments4 outlines distinctions for CBDC’s, “First, CBDC would be legal tender. Second, it would convertible one-to-one into reserve balances or paper currency.” The report further elaborates that the digital currency would be used mainly for large transactions. According to an article written by Vipin Bharahan in Forbes Magazine5, he makes mention that the design is like Bitcoin, but different. He points out the challenge for Project Hamilton’s creators is to access data not available in the core system without violating privacy, “Implementing privacy preserving architecture deeper into the guts of the core infrastructure as well as into the wallets themselves may solve these choices. These may include zero-knowledge proofs and homomorphic encryption protocols. These are seen as worthy goals for Phase II.” Homomorphic encryption is defined as a type of encryption method that allows computations to be performed on encrypted data without first decrypting it with a secret key. The slang term used is known as “Biden Bucks” nicknamed after the President. An advertisement for a company called Paradigm Press, featured prominently in some YouTube videos, invoke fears of a power grab through Project Hamilton. Further elaborating in this ad, it makes mention of financial surveillance by the government through this technology. The US Federal Government already monitors financial transactions of six hundred dollars and above without Digital Currency. The website Snopes6 already found the claim by Paradigm Press to be false, even pointing to the fact the Executive Order was concerned with preserving Democratic Safeguards should a CBDC be implemented. The White House Office of Science and Technology report also made mention the need to safeguard Civil and Human rights of account holders. As of now, the ways of making financial payments are Cash, Check, Credit Card, Debit Card, and Crypto Currencies. This story will be updated as more information becomes available. Sources: 1. https://www.federalregister.gov/documents/2022/03/14/2022-05471/ensuring-responsible-development-of-digital-assets 2. https://www.bostonfed.org/-/media/Documents/Project-Hamilton/Project-Hamilton-Phase-1-Whitepaper.pdf 3. https://www.whitehouse.gov/ostp/news-updates/2022/09/16/technical-possibilities-for-a-u-s-central-bank-digital-currency/ 4. https://home.treasury.gov/system/files/136/Future-of-Money-and-Payments.pdf 5. https://www.forbes.com/sites/vipinbharathan/2022/02/09/project-hamilton-on-the-report-published-by-the-boston-fed-and-mit/?sh=5771b52d1d83 6. https://www.snopes.com/fact-check/executive-order-14067-biden-bucks/