Many U.S. lawmakers oppose the issuance of CBDC

Author: Derek Andersen, Cointelegraph; Compiler: Songxue, Golden Finance

On September 14, the U.S. House of Representatives subcommittee held a hearing on the "Digital Dollar Dilemma", and there was a voice of opposition in the halls of the U.S. Congress. Five expert witnesses are scheduled to testify at the hearing, with the majority opposing the creation of a U.S. central bank digital currency (CBDC), or digital dollar.

The partisan divide was on full display as the hearing began, with subcommittee chairman French Hill saying: "No one in Congress supports a CBDC except on the fringes."

Stephen Lynch, ranking member of the subcommittee, warned of “false narratives and fear-mongering, much of it coming from the cryptocurrency industry itself,” and announced the formation of a Congressional Digital Dollar Caucus.

The five witnesses expected to speak at the hearing before the Financial Services Subcommittee on Digital Assets, Financial Technology and Inclusion are Digital Assets CEO Yuval Rooz, Bank Policy Institute Senior Vice President Paige Paridon, University of Pennsylvania’s Christina Parajon Skinner, Norbert Michel of the Cato Institute and Raul Carrillo, a lecturer at Columbia University.

The hearing was explicitly dedicated to discussing alternatives to CBDC, but only Rooz was directly associated with one business.

Digital Asset is the creator of the Daml smart contract language and the Canton blockchain, and is backed by the likes of Microsoft, Goldman Sachs and Deloitte. Rooz laid out his position on CBDC in prepared testimony but urged that any form of digital dollar should respect the privacy rights guaranteed by the Fourth Amendment and leverage existing technology.

Paridon spoke about the claims of digital dollar proponents and offered counterarguments. She focuses on possible problems within the banking system. Based on a list of potential risks, she concluded: “A CBDC could disrupt the U.S. commercial banking system and severely limit the supply of credit to the economy.”

“The introduction of a CBDC is likely to come at a cost to individual economic freedom because it provides states with more tools – and therefore greater temptation – to establish command-and-control public policies.”

The Cato Institute has a strong record as an opponent of CBDC. Michelle addressed the technical and political issues, arguing that a U.S. CBDC would have no benefits.

Carrillo said he supports digital dollar technology in general but opposes CBDC specifically. One of the main objections raised by Carrillo is to centralize responsibilities at the Federal Reserve, since the Treasury Department also plays many roles in currency creation and the implementation of financial technology.

Carrillo said in the analysis, "We are not yet living in a state of financial surveillance, which is a profoundly mistaken assumption." He continued:

“Although counterintuitive to some CBDC critics, substantively reining in government financial regulation means limiting public-private partnerships because direct relationships between governments and members of the public are more likely to generate constitutional protections, including those of the Fourth Amendment. ."

Carrillo believes that blockchain technology is not a decisive factor in ensuring privacy: “Ideally, blockchain hides sensitive data about users, but in reality, blockchain systems must be integrated with the rest of the Internet’s monitored base. facilities to interact.”

Carrillo approves the Electronic Money and Secure Hardware Act. Lynch reintroduced the recommendation on Sept. 14, but it was not reviewed by the subcommittee.

Carrillo concluded: “The DFC [digital fiat currency] discourse in the United States is relatively anemic and unimaginative. […] Policymakers should support a series of digital dollar pilot projects and develop a steady cadence of innovation aimed at providing benefits to all People build a safe and reliable financial system.”

The Fed’s slogan is “No CBDC without congressional authorization,” and it’s well known. HR 3402, one of the bills discussed at the hearing, explicitly requires congressional authorization before a CBDC can be introduced. HR 3712 is also under consideration, which would largely ban CBDC research. Emmer opened the hearing by calling the Boston Fed study "crude." Emmer’s recently reintroduced CBDC Counter-Surveillance State Act is also on the hearing agenda.

The President's Digital Asset Executive Order issued in March 2022 mandates CBDC research. The Digital Dollar Project, a think tank co-founded by former U.S. Commodity Futures Trading Commission Chairman Christopher Giancarlo, has also made significant contributions to CBDC research.