As the digital assets market continues to grow, the White House has placed “urgency” on researching a potential U.S. Central Bank Digital Currency (CBDC) and the cybersecurity risks and benefits that come with it, according to a White House official.
Carol House, the National Security Council’s director for cybersecurity and secure digital innovation, spoke at an event hosted by the Atlantic Council event on June 15, in which she said the growing interest in CBDCs only augments the need for market and consumer protections.
“We need robust protections. We also need to confront how our financial system has and has not worked for certain consumers and ensuring that we have access to services that are equitable, inclusive, and efficient,” House said. “That’s why in the U.S., we are placing the highest urgency on the research into the merits of a possible U.S. Central Bank Digital Currency, continuing to build off of the many years of efforts being driven out of the Federal Reserve.”
House explained that President Biden’s executive order (EO) issued in March on the risks and benefits of digital assets is “so important” to ensure the right protections are in place.
The EO encourages the Federal Reserve to continue its research, development, and assessment efforts for a U.S. CBDC, including the development of a plan for broader U.S. government action. It also calls for an assessment of CBDCs to ensure they protect Americans’ interests.
“Recent events and major incidents like SolarWinds, Microsoft Exchange hack, Colonial Pipeline, Log4j, all of these make it very clear on the need for action to improve the cybersecurity posture of Federal networks, but also critical infrastructure,” House said. “Any future potential CBDC systems would certainly count as part of that critical infrastructure and need to account for measures that we need to put in place to better secure the integrity of our software supply chain.”
Over 100 countries are currently exploring or piloting CBDCs, and House said the United States’ research will build off of the work of other nations. She explained CBDCs could bring potential benefits such as “lower transaction fees, driving financial inclusion, and continuing to reinforce U.S. leadership in the financial system.”
“But none of that works without reinforcing the importance of cybersecurity, privacy, and other democratic principles into the systems,” House added. “A U.S. CBDC is not an authoritarian CBDC and will not operate as one.”
As directed by the EO, the Federal Reserve and other applicable agencies have until September to provide an assessment on a potential U.S. CBDC, if deemed appropriate.