Experts Testify Against Digital Dollar and Raise Concerns over CBDC Risks in U.S. Congress Hearing
Summary:
United States Congress witnesses argue against the creation of a digital dollar and express concerns over the potential risks associated with a central bank digital currency (CBDC). The hearing explores private sector alternatives to CBDC. Experts urge leveraging existing technologies and raising caution about the impact on the commercial banking system. The debate focuses on individual economic liberties and the concentration of responsibilities within the Federal Reserve. The discourse underscores the need for innovative pilot programs to build a secure financial system. The Biden administration's support for CBDC research and contributions from the Digital Dollar Project are mentioned.
Members of the United States Congress expressed their disapproval during a hearing conducted by the House of Representatives Financial Services Committee digital assets subcommittee on September 14. The hearing focused on the "digital dollar dilemma" and featured five expert witnesses, all of whom argued against the creation of a U.S. central bank digital currency (CBDC) or digital dollar. The witnesses included Digital Asset CEO Yuval Rooz, senior vice president of the Bank Policy Institute Paige Paridon, Christina Parajon Skinner from the University of Pennsylvania Wharton School, Norbert Michel from the Cato Institute, and Raúl Carrillo, a lecturer at Columbia University. The hearing primarily aimed to explore private sector alternatives to CBDC, with only Rooz having a direct affiliation with a business. In his testimony, Rooz emphasized the importance of leveraging existing technologies in the private sector for any form of digital dollar.
Paridon countered arguments made by digital dollar proponents and focused on potential risks within the banking system. She concluded that a CBDC could undermine the commercial banking system and limit credit availability in the United States. Skinner provided historical context for CBDC, referencing the intentions of the Founding Fathers. She concluded that introducing CBDC could potentially diminish individual economic liberty by enabling the state to establish command-and-control style public policies. The Cato Institute, well-known for opposing CBDC, was represented by Michel, who highlighted technical and political issues and saw no benefits in a U.S. CBDC.
Carrillo expressed his support for a digital dollar but opposed a CBDC, citing concerns about concentrated responsibilities within the Federal Reserve and the Treasury Department's various roles in monetary creation and financial technology implementation. Carrillo argued that the assumption that the United States does not already live in a financial surveillance state is mistaken. He emphasized the need to limit government financial surveillance and endorsed the ECASH Act, which he stated would be reintroduced on September 14. Carrillo concluded that the discourse on digital fiat currency in the United States should embrace innovation through pilot programs to build a safe and secure financial system for all.
During the presentations, the question of who specifically supports CBDC was left unanswered. Some references were made to CBDC research conducted by the Federal Reserve, but given the Fed's stance of requiring Congressional authorization, it remains unclear. One of the bills discussed at the hearing, H.R. 3402, seeks to mandate the introduction of a CBDC through Congressional mandate, while H.R. 3712 aims to restrict CBDC research. The recently reintroduced "CBDC Anti-Surveillance State Act" by Rep. Tom Emmer was also on the hearing agenda. The Biden administration's support for CBDC research is presumed based on President Biden's executive order in March 2022 mandating such research. The Digital Dollar Project, co-founded by Christopher Giancarlo, former head of the U.S. Commodity Futures Trading Commission, also made significant contributions to CBDC research.
Published At
9/14/2023 6:19:52 PM
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