Five speakers at a hearing for the US House’s Financial Services Committee voted to create a US national stablecoin, or CBDC, on Tuesday. In doing so, they noted China’s competition.
The US House Subcommittee on National Security, International Development, and Monetary Policy today held a hearing titled “Under the Radar: Alternative Payment Systems and the National Security Implications of Their Development.”
— US House Committee on Financial Services (@FSCDems) September 20, 2022
House Representative Guam Michael San Nicolas called for a vote to measure the level of the US government’s need to create some form of digital currency, such as CBDC. All five speakers agreed there was a “need for consensus”.
Wilson Center Fellow Scott Duweck, New American Security Research Associate Emily Zinn, and Atlantic Council Fellow Dr. Carla Norloff was one of the three witnesses on the panel focusing on technology and economic security. Also in attendance were Ari Redford, head of legal and government affairs at TRM Labs, and Jonathan Levine, co-founder and chief strategist at Chainalysis.
CBDC launch is still uncertain
The committee’s consensus does not guarantee that CBDC USA is planned. Nevertheless, the vote indicates that there is good potential for the digital currency.
A few months ago, Federal Reserve Chairman Jerome Powell called such a finding “a very important financial finding” and “something we really need to explore as a country.”
Why Should the US Government Consider Its Own CBDC? The Commission cited international sanctions, the desire to protect the value of the US dollar and threats to national security.
In particular, Republican Congressman French Hill of Arkansas said the U.S. should take steps to ensure the U.S. dollar remains “the world’s reserve currency.”
Spending money like drunken sailors puts the dollar at far greater risk than this digital currency debate. But I insist that our plan be flagged and passed into law in order to get a whole-of-government perspective on how we maintain a competitive U.S. dollar in the 21st century.
Massachusetts Democratic Rep. Jake Auchinclose said the hearing was “encouraging” because the committee made progress on bipartisan stablecoin legislation — the only thing CBDC could agree on as the midterm elections approach.
Speakers during the hearing raised concerns about the dangers of China’s growing financial presence competing with the U.S. economy.
Congressman Jim Himes, a Democrat from Connecticut, asked panelists how the U.S. could counter China without bringing “economic disaster” to the world.
In response, Levin said the United States must continue to uphold property and privacy rights when developing financing solutions. TRM Labs’ Redbord agreed with Levine that the US needs a “digital asset that sticks to our values” so that potential investors can buy US CBDC instead of Chinese.
According to Professor Norloff, China is developing its own CBDC to compete with the US dollar.
China, which is trying to catch up with America, is using various methods for it. China’s creation of a CBDC is critical to getting closer to where the US dollar is now.
China’s CBDC is part of the country’s efforts to “collect information about people,” Duwek added.
E-CNY pilot extended to more commissions
While the US debates the merits of creating its own CBDC, China is moving forward with trials. South China Morning Post Information The People’s Bank of China on Tuesday will begin testing its new digital version of the Chinese yuan, e-CNY, in four more provinces.
The US may feel pressure from other countries outside of China to create its own CBDC soon. Norloff concluded:
This is not just a China question, but a general question. Currently, around 104 countries are researching CBDC.
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