A Congressional hearing on the “digital dollar dilemma” took place on September 14, eliciting strong opposition from expert witnesses who argued against the creation of a U.S. central bank digital currency (CBDC). The hearing, held by the House of Representatives Financial Services Committee digital assets subcommittee, featured five witnesses who presented their views on the matter.
The witnesses scheduled to speak at the hearing included Digital Asset CEO Yuval Rooz, Paige Paridon, senior vice president of the Bank Policy Institute, Christina Parajon Skinner from the University of Pennsylvania Wharton School, Norbert Michel from the Cato Institute, and Raúl Carrillo, a lecturer at Columbia University.
While the hearing focused on private sector alternatives to CBDC, only Rooz had a direct affiliation with a business. Digital Asset, known for creating the Daml smart contract language and the Canton blockchain, is backed by prominent companies such as Microsoft, Goldman Sachs, and Deloitte. In his testimony, Rooz emphasized the importance of leveraging existing technologies in the private sector for any form of digital dollar.
During the hearing, Paridon countered claims made by digital dollar supporters and highlighted potential risks within the banking system. She warned that a CBDC could undermine the commercial banking system in the United States and restrict credit availability to the economy.
Skinner provided a historical context for CBDC and expressed concerns about the potential impact on individual economic liberty. She stated, “Introducing CBDC is likely to have certain costs to individual economic liberty by providing the State with more tools – and hence greater temptation – to establish command-and-control style public policy.”
The Cato Institute, a known opponent of CBDC, presented its objections through Norbert Michel, who addressed technical and political issues and expressed skepticism about the benefits of a U.S. CBDC.
Carrillo, on the other hand, expressed support for a digital dollar but opposed a CBDC. He raised concerns about the concentration of responsibilities in the Federal Reserve and advocated for limiting government financial surveillance. Carrillo argued, “There is a profoundly mistaken assumption that we do not already live in a financial surveillance state.”
He also emphasized that blockchain technology does not guarantee privacy, stating, “Aspirationally, blockchain hides sensitive data about users, but in practice, blockchain systems necessarily interface with the surveilled infrastructure of the rest of the internet.”
Carrillo endorsed the Electronic Cash and Secured Hardware (ECASH) Act, which aims to build a safe and secure financial system. He called for policymakers to support Digital Dollar pilot programs and foster innovation in this area.
The hearing left unanswered questions regarding the supporters of CBDC, with references made to CBDC research conducted by the Federal Reserve. However, given the Fed’s stance of requiring Congressional authorization for CBDC, the existence of such research seems uncertain.
Several bills were discussed during the hearing, including H.R. 3402, which seeks to mandate the introduction of a CBDC, and H.R. 3712, which would largely ban CBDC research. Rep. Tom Emmer’s “CBDC Anti-Surveillance State Act” was also on the agenda.
The Biden administration has shown support for CBDC research, as evidenced by the president’s executive order mandating it. The Digital Dollar Project, co-founded by former U.S. Commodity Futures Trading Commission head Christopher Giancarlo, has also contributed significantly to CBDC research.
Overall, the hearing shed light on the various perspectives surrounding the digital dollar dilemma and the potential implications of a CBDC on the U.S. financial system.
Sources:
– Financial Services Committee: https://cointelegraph.com/news/house-financial-services-committee-witnesses-air-multiple-anti-cbdc-arguments(https://financialservices.house.gov/calendar/eventsingle.aspx?EventID=408960)
– Cointelegraph: https://cointelegraph.com/news/house-financial-services-committee-witnesses-air-multiple-anti-cbdc-arguments(https://cointelegraph.com/news/microsoft-goldman-sachs-others-partner-in-new-blockchain-network)
– Cato Institute: https://cointelegraph.com/news/house-financial-services-committee-witnesses-air-multiple-anti-cbdc-arguments(https://cointelegraph.com/news/cbdcs-threaten-americans-core-freedoms-cato-institute)
– House committee discussions on digital dollar hearing: https://cointelegraph.com/news/house-financial-services-committee-witnesses-air-multiple-anti-cbdc-arguments(https://cointelegraph.com/news/house-committee-discussions-digital-dollar-hearing)
– U.S. Treasury report on instant payment and CBDC research: https://cointelegraph.com/news/house-financial-services-committee-witnesses-air-multiple-anti-cbdc-arguments(https://cointelegraph.com/news/us-treasury-report-encourages-instant-payment-recommends-more-cbdc-research)
– H.R. 3402: https://cointelegraph.com/news/house-financial-services-committee-witnesses-air-multiple-anti-cbdc-arguments(https://docs.house.gov/meetings/BA/BA21/20230914/116340/BILLS-118HR3402ih.pdf)
– H.R. 3712: https://cointelegraph.com/news/house-financial-services-committee-witnesses-air-multiple-anti-cbdc-arguments(https://docs.house.gov/meetings/BA/BA21/20230914/116340/BILLS-118HR3712ih.pdf)
– Tom Emmer’s anti-CBDC bill: https://cointelegraph.com/news/house-financial-services-committee-witnesses-air-multiple-anti-cbdc-arguments(https://cointelegraph.com/news/tom-emmer-anti-cbdc-bill-reintroduced)
– Biden’s executive order on digital assets: https://cointelegraph.com/news/house-financial-services-committee-witnesses-air-multiple-anti-cbdc-arguments(https://cointelegraph.com/news/biden-s-executive-order-promises-great-things-for-the-crypto-industry-eventually)
– Digital Dollar Project’s contribution to CBDC research: https://cointelegraph.com/news/house-financial-services-committee-witnesses-air-multiple-anti-cbdc-arguments(https://cointelegraph.com/news/digital-dollar-project-completes-cbdc-retail-remittance-pilot-with-western-union)
– Magazine: China’s Digital Yuan Is an Economic Cyberweapon, and the US Is Disarming: https://cointelegraph.com/news/house-financial-services-committee-witnesses-air-multiple-anti-cbdc-arguments(https://cointelegraph.com/magazine/china-digital-yuan-economic-cyberweapon-us-disarming)
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I've been involved in the cryptocurrency world since 2016 and trading since 2019. I started Moon and Lambo in 2021. I'm passionate about crypto and love to share my knowledge. I hate bankers and I hope that cryptocurrency will change the financial world for the better. View full profile...
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