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- There are concerns that the FedNow instant payment infrastructure developed by the Federal Reserve will allow the government to surveil and freeze bank accounts.
- Federal Reserve officials and experts from the Brookings Institution have dismissed these concerns, stating that FedNow does not grant the agency additional surveillance and enforcement authorities.
Federal Reserve Addresses Concerns Over Bank Account Surveillance
The Federal Reserve is responding to concerns regarding its new instant payment infrastructure, FedNow, amid fears that it could enable the government to surveil and freeze individuals’ bank accounts. In a fact-checking report by the Associated Press, Federal Reserve officials clarify that FedNow does not grant the agency additional surveillance and enforcement authorities.
Experts Dismiss Concerns as Baseless
Experts from the Brookings Institution, such as Aaron Klein, a senior fellow, have dismissed concerns about bank accounts being seized through FedNow as a “nonsense campaign” with no basis in reality. Klein explains that FedNow is an upgrade to the outdated Automated Clearinghouse system, bringing it into the modern era.
The Federal Reserve, in response to concerns raised about the FedNow instant payment service, has stated that the new infrastructure does not provide the agency with additional surveillance and enforcement authorities. According to Fed officials, FedNow is simply an instant payments service offered to banks and credit unions to facilitate fund transfers for their customers. They emphasize that neither the Fed nor FedNow can access individuals’ bank accounts or control how they choose to spend their money.
Aaron Klein, a senior fellow at the Brookings Institution, supports the Federal Reserve’s stance and dismisses the concerns as baseless. Klein explains that FedNow is an upgrade of the existing Automated Clearinghouse system, which is outdated and in need of modernization. He compares the upgrade to transitioning from Blockbuster to Netflix, highlighting the advancements and improvements it brings.
The concerns over bank account surveillance and freezing have surfaced in the context of discussions around central bank digital currencies (CBDCs) and their potential impact on financial privacy and economic freedom. Democratic presidential candidate Robert F. Kennedy Jr. has raised warnings about CBDCs, expressing concerns about the government’s increased power to surveil and control economic life. Kennedy voices his opposition to CBDCs, citing the potential threat they pose to dissent and the importance of preserving the ability to save and spend without political interference.
In contrast, he expresses support for Bitcoin, which he sees as a means for conducting transactions free from government interference and a lifeline for people’s movements around the world.