12 June 2020
The first white paper released by The Digital Dollar Project (TDDP) delves into preparations for the development of a U.S. Central Bank Digital Currency (CBDC).
Between privacy and centralization While not wishing to step outside existing regulatory bounds, TDDP's aim is not to overturn the current monetary system of the U.S. The format of the flow of currency from the Federal Reserve to financial institutions and then to the public should be maintained, as TDDP already mentioned several times:
“A digital dollar will be distributed through the existing two-tiered architecture of commercial banks and regulated intermediaries.”
While some recent legislation has called for direct consumer access to accounts with the Fed, Gorfine clarified that the proposed structure of TDDB partially represents an attempt at decentralization:
“Relying primarily on the private sector and regulated banks and money transmitters seems like a much better approach. Public solutions would only make sense if there are remaining gaps and problems to solve for. [...] If you think about the way the Fed developed, it was attempting to decentralize the federal banking system and related policy decisionmaking.”
Similarly, the white paper states that existing Anti-Money Laundering or “Know Your Customer” requirements must be met for any digital dollar innovations. Meanwhile, privacy is a central concern as both the project’s founders and the white paper have been mentioning for a long time. Most agree that the 4th amendment must be taken into account for any future legislation.
On that subject, Gorfine also stated: “This is a very meaty and important area. Ultimately, these are policy choices that need to be made by the government,” adding: “I think what we flag in the paper is a champion [...] model by anchoring and analogizing to physical cash.”
The rensposiveness of the financial system was brought into question many times as a consequence of the COVID-19 pandemic, mostly about how to increase it, where a digital dollar is being called for by a number of bills.