Economic Archives | Page 2 of 692 | Digital Watch Observatory

US lawmakers push permanent CBDC ban over surveillance concerns

Republican lawmakers are seeking to permanently block the creation of a US central bank digital currency as the House prepares to consider an amended housing bill later this week.

Representatives Mike Flood and Warren Davidson are pushing to remove language that would allow a restriction on a US CBDC to expire in 2030. Their proposal is intended to prevent what they describe as a future pathway for developing or issuing a digital dollar.

The debate follows earlier House action on the Anti-CBDC Surveillance State Act, sponsored by Representative Tom Emmer. According to Congress.gov, the bill would prohibit a Federal Reserve bank from offering products or services directly to individuals, maintaining accounts for individuals or issuing a central bank digital currency. It would also restrict the Federal Reserve Board from using a CBDC to implement monetary policy or from testing, studying, creating or implementing one, subject to exceptions in the bill.

Debate over central bank digital currencies in the United States has increasingly focused on privacy, financial surveillance and government control over payment systems. Critics warn that a digital dollar could expand state oversight of financial activity, while supporters of CBDC research argue that central bank digital money could modernise payments and support financial inclusion.

Lawmakers backing permanent restrictions have repeatedly cited civil liberties concerns and pointed to China’s digital currency model as a warning against state-controlled digital money. The dispute also reflects a broader divide over whether the future of digital payments should be led by public central bank infrastructure or by private-sector instruments such as stablecoins and other digital assets.

Why does it matter?

The debate could shape the direction of US digital finance policy by limiting the Federal Reserve’s ability to develop or even test a digital dollar. A permanent CBDC restriction would reinforce a policy preference for private-sector payment innovation, including stablecoins and cryptocurrencies, while narrowing the role of public central bank money in future digital payment systems. It also places the United States on a different path from countries that are actively exploring or deploying CBDCs as part of payment modernisation and financial sovereignty strategies.

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White House pushes fintech integration into US banking framework

US President Donald Trump has signed an executive order directing federal financial regulators to review rules and supervisory practices that may be limiting fintech and digital asset firms’ access to traditional financial services and payment infrastructure.

The order says federal regulators should identify regulations, guidance, supervisory practices and application processes that could be updated to support innovation, competition and fintech partnerships with federally regulated financial institutions.

Agencies covered by the review include the Securities and Exchange Commission, the Commodity Futures Trading Commission, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the National Credit Union Administration and the Consumer Financial Protection Bureau.

Within 90 days, regulators must review existing rules and processes affecting fintech firms, particularly small and emerging companies. The review will examine barriers to partnerships with banks, credit unions, broker-dealers, investment advisers and other regulated institutions, as well as application processes for bank charters, deposit insurance, licences, registrations and authorisations.

The order also asks the Federal Reserve Board to evaluate whether uninsured depository institutions and non-bank financial companies, including firms involved in digital assets and other novel financial activities, could receive broader access to Reserve Bank payment accounts and payment services. The review will also cover companies participating directly in real-time payment networks.

The Federal Reserve is asked to assess legal authority, financial stability risks, legal obstacles and possible options for expanding such access where permitted by law. It must also examine whether the 12 regional Federal Reserve Banks apply consistent standards when granting or denying access to Reserve Bank accounts and payment services.

If the Federal Reserve concludes that existing law allows direct access for covered firms, the order asks it to establish transparent application procedures and make decisions on complete applications within 90 days.

The order comes amid continued pressure from fintech and digital asset companies seeking clearer pathways into core financial infrastructure. The White House said the policy aims to reduce unnecessary barriers to entry while balancing innovation with safety and soundness, consumer and investor protection, market integrity and financial stability.

Why does it matter?

The order could reshape how fintech and digital asset firms interact with the US banking system, but only if regulators conclude that broader access is legally and prudentially viable. Its significance lies in putting bank partnerships, licensing processes and Federal Reserve payment access under formal review, potentially opening new pathways for non-bank financial companies while raising questions about oversight, financial stability and the boundaries between banks and fintech firms.

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OECD review highlights growth and regulatory challenges in ASEAN digital trade

The OECD has published a Digital Trade Review of the Association of Southeast Asian Nations, examining regional growth in digital trade and related regulatory challenges. According to the report, ASEAN digital trade exports reached approximately US$387 billion.

The OECD said ASEAN benefits from trade openness, increasing digital adoption, and evolving regional policy initiatives. The report noted that uneven participation and fragmented domestic regulations may limit further digital trade integration across the region.

The review identified barriers, including restrictions affecting cross-border data flows, telecommunications, digital services, and trade facilitation systems. The OECD highlighted the importance of regulatory alignment and progress towards paperless trade systems.

The report also discussed opportunities related to AI adoption, including reforms linked to tariffs, data flows, and digital services regulation. These findings underline the importance of coordinated reforms to strengthen ASEAN’s role in the global digital economy.

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US crypto usage rises to 10% in 2025, Fed reports

Crypto adoption in the United States rose to 10% of adults in 2025, up two percentage points from the previous year, according to the Federal Reserve’s latest report on the economic well-being of US households.

The figure marks a rebound from 7% in 2023 and 8% in 2024, though it remains below the 12% recorded in 2021, when the survey first asked about cryptocurrency. The Federal Reserve notes that its online survey may include respondents who are more technologically connected than the overall population.

The data shows that crypto is used far more commonly as an investment tool than as a payment method. Around 9% of adults bought or held cryptocurrency as an investment in 2025, while 2% used it to buy something or make a payment, and 1% used it to send money to friends or family.

Among adults who used cryptocurrency for financial transactions, the most common reason was that the recipient preferred cryptocurrency. Other reasons included faster transfers, privacy and lower cost.

Transactional crypto use remained more common among unbanked adults, with 6% using cryptocurrency for financial transactions compared with 2% of banked adults. The Fed also found higher transactional use among adults who used nonbank check cashing or money orders. However, it stressed that crypto use for transactions remained very low even among those groups.

Why does it matter?

The Fed’s data show that crypto use in the United States is rebounding, but it still primarily functions as an investment rather than a mainstream payment tool. Payment use remains limited, including among adults who are more likely to rely on nonbank financial services, suggesting that digital assets have not yet become a broad alternative to traditional payment systems.

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Myanmar proposes Anti-Online Fraud Bill targeting digital currency scams

Myanmar’s military-backed authorities have proposed a new Anti-Online Fraud Bill to tackle digital currency scams and online fraud networks operating in the country.

The draft legislation would introduce severe penalties for offences linked to online fraud and ‘digital currency fraud’. Reports citing the text say those convicted could face prison sentences ranging from 10 years to life imprisonment.

The bill also proposes the death penalty in the most serious cases involving online scam centres, particularly where people are unlawfully detained, violently coerced or forced into scam operations. AFP, cited by Malay Mail, reported that the proposed penalty would apply to those who detain or violently coerce victims into working in online scam centres.

The proposal reflects growing pressure on Myanmar over large scam compounds where trafficked people have reportedly been forced into online fraud schemes, including romance and cryptocurrency scams. International scrutiny has intensified as cyber-fraud networks across Southeast Asia continue to target victims globally.

Myanmar’s authorities have presented online fraud and online gambling as national security concerns. State media has previously reported crackdowns, deportations and plans for a national anti-scam centre, while also describing telecom fraud and online gambling as threats requiring stronger enforcement.

The bill comes amid wider regional action against transnational scam networks. China has pursued criminal cases linked to Myanmar-based fraud syndicates, while international organisations and law enforcement agencies have warned that online scam compounds combine cybercrime, financial fraud and human trafficking.

Why does it matter?

The proposed bill shows how governments are escalating responses to transnational online fraud networks, particularly where crypto scams overlap with human trafficking and forced labour in scam compounds. Myanmar’s approach would mark a shift towards extreme punitive measures, raising both enforcement and human rights concerns, while highlighting how digital fraud has become a cross-border security issue involving organised crime, financial losses and exploitation of vulnerable people.

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New Zealand outlines public service reforms focused on digital systems and AI

New Zealand has announced public service reforms aimed at improving efficiency, reducing duplication and expanding digital systems across government operations.

Public Service Minister Paul Goldsmith outlined plans to streamline departments and expand the use of digital systems and AI in public administration. The government said the reforms respond to public sector growth that has increased in recent years.

The programme sets a target of returning the core public service to around 55,000 employees by 2029, reversing growth that saw staffing rise from approximately 47,000 in 2017 to more than 65,000 in 2023. According to officials, projected savings are intended to support areas including healthcare, education, infrastructure, and security.

Critics, including the Public Service Association, have raised concerns that the reforms could weaken service delivery and that AI and restructuring may not adequately replace experienced workers, warning of potential disruption across essential public services.

Why does it matter?

The reform reflects a shift towards ‘digital-first state capacity’, where governments attempt to maintain or improve service delivery while constraining headcount growth through automation, AI integration and organisational consolidation.

The approach signals an increasing reliance on data-driven and AI-enabled systems to offset labour intensity in back-office functions, while reallocating fiscal resources towards frontline services and infrastructure.

At the same time, it raises structural questions about institutional resilience, transition costs of large-scale digitisation, and whether productivity gains from AI can realistically substitute for experienced human capacity in complex public service environments.

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Jury rules in favour of OpenAI and Sam Altman in Elon Musk lawsuit

A federal jury in Oakland, California, ruled in favour of Sam Altman, OpenAI and its president, Greg Brockman, in a lawsuit brought by Elon Musk. Musk alleged that OpenAI’s leadership departed from the organisation’s original non-profit mission.

Judge Yvonne Gonzalez Rogers dismissed Musk’s claims after the jury delivered its advisory verdict. The court concluded that the claims were filed outside the applicable legal time limit, accepting OpenAI’s argument that Musk had been aware of discussions about a for-profit structure several years earlier.

Musk argued that OpenAI had shifted away from its original non-profit structure after establishing a for-profit entity. OpenAI denied the allegations throughout the case, arguing that Musk understood and supported discussions about restructuring before leaving the company in 2018.

Musk alleged that Sam Altman and the other defendants violated the organisation’s charitable purpose and financially benefited from it unfairly, arguing that OpenAI had originally been established in 2015 as a non-profit focused on benefiting humanity before later shifting towards private profit.

OpenAI rejected all of Musk’s claims and stated that he was always aware of plans to create a for-profit entity.

Musk later announced plans to appeal, claiming the ruling was based on procedural timing rather than the substance of the allegations. The ruling may reduce legal uncertainty for OpenAI as the company continues expanding its commercial operations.

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Australia’s WGEA outlines AI transparency rules for internal use

Australia’s Workplace Gender Equality Agency has published an AI transparency statement outlining how it uses AI internally, in line with the Digital Transformation Agency’s Policy for the Responsible Use of AI in Government.

The agency uses AI to enhance workplace productivity and support internal service delivery processes, including case management, in a controlled and human-centred manner. It does not use AI for statutory decision-making, compliance determinations, auditing outcomes or enforcement actions.

Internally, AI helps staff manage and respond to enquiries using approved information sources. All outputs are reviewed and approved by WGEA staff before use, and AI-generated material remains advisory only.

The agency does not use AI systems to interact directly with the public or make decisions affecting individuals without human involvement. External communications are reviewed and issued by WGEA staff.

The statement notes that AI does not change WGEA’s accountability for the accuracy, quality or appropriateness of information provided. The agency also monitors usage levels, outcomes and reporting mechanisms to ensure systems operate as intended and align with responsible AI principles.

WGEA designated its Chief Operating Officer as the accountable official on 19 December 2024. The role is responsible for ensuring AI use complies with relevant legislation, whole-of-government policy and internal governance arrangements.

Why does it matter?

The statement shows how public bodies are beginning to formalise transparency around internal AI use, even when systems are not used for direct public interaction or decision-making. By limiting AI to advisory functions, requiring human review and naming an accountable official, WGEA is setting out a practical governance model for low-risk public-sector AI use.

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South Korea expands industrial policy support for AI manufacturing technologies

South Korea’s Ministry of Trade, Industry and Resources announced plans to establish an industrial growth fund to support manufacturing AI transformation and other industrial policy initiatives over the next three years.

According to the ministry, private banks managing government research and development funds pledged combined anchor investments of 1.1 trillion won for the initiative, including 620 billion won from Hana Bank. The ministry said additional private-sector investment is expected to support the fund.

A M.AX innovation fund established under the initiative will support projects related to manufacturing AI transformation, including robotics, AI factories, mobility technologies, and autonomous vessels. According to the ministry, the government aims to raise 500 billion won for the sub-fund based on an initial 100 billion won anchor investment.

The ministry also signed a cooperation agreement with banks and related agencies to provide 700 billion won in financial support programmes, including technology guarantees and trade insurance, for companies participating in research and development projects.

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China pushes deeper AI integration with advanced manufacturing

Chinese Premier Li Qiang has called for deeper integration between AI and advanced manufacturing as China seeks to accelerate the intelligent upgrading of its industrial economy.

Li made the remarks during an inspection tour of technology companies in Beijing, where he was briefed on innovation and industrial development in intelligent robotics. He described intelligent robots as a key vehicle for integrating AI with advanced manufacturing.

The premier called for stronger basic research, breakthroughs in core technologies and further exploration at the frontier of intelligent robotics. He also urged faster innovation in complete machines, key components, and intelligent decision-making and control systems to support high-quality industrial development.

Li said China should make use of its large domestic market, complete industrial chains and wide range of application scenarios to expand the intelligent robotics sector. He also said enterprises should play a leading role in industrial transformation.

Companies were encouraged to advance intelligent upgrades across the full production process, including research and development, design, manufacturing, operations management and after-sales services.

Why does it matter?

The remarks show how China is positioning AI as part of industrial modernisation, not only as a digital services technology. By linking AI with robotics, manufacturing processes and enterprise-led upgrading, Beijing is reinforcing the role of intelligent systems in productivity, competitiveness and high-quality industrial growth.

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