Legislators and experts in the United States voice strong resistance to CBDC.
The topic of a US central bank digital currency (CBDC) faced strong opposition during a hearing on September 14th, hosted by a subcommittee of the US House of Representatives.
The hearing, focusing on the “digital dollar dilemma,” featured five expert witnesses who argued against digital dollar creation.
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As the Financial Services Subcommittee on Digital Assets, Financial Technology, and Inclusion gathered, partisan lines were quickly drawn. Subcommittee Chair French Hill opened the meeting with skepticism, saying that support for a CBDC in Congress was limited to fringe elements.
Representative Tom Emmer criticized CBDCs, labeling them as tools for communists, while Ranking Member Stephen Lynch accused the cryptocurrency industry of spreading "false narratives and fear-mongering" and revealed plans for a congressional Digital Dollar Caucus.
Experts called to testify included Yuval Rooz, CEO of Digital Asset; Paige Paridon from the Bank Policy Institute; Christina Parajon Skinner of the University of Pennsylvania; Norbert Michel from the Cato Institute; and Raúl Carrillo, a lecturer at Columbia University.
Yuval Rooz’s company, Digital Asset, specializes in smart contract language and blockchain technology and has partnerships with major companies like Microsoft and Goldman Sachs. Rooz did not explicitly oppose or support CBDCs but insisted that any digital dollar should respect Fourth Amendment privacy rights and benefit from existing private sector technologies.
Paige Paridon focused on the potential negative impact a digital dollar could have on the US banking system, warning that its introduction could "severely constrict the availability of credit to the economy."
Christina Parajon Skinner contextualized CBDCs from a historical perspective, arguing that introducing them would compromise individual economic liberties by empowering the government to pursue command-and-control policies.
Norbert Michel from the Cato Institute, a long-standing critic of CBDCs, dismissed the idea, citing technical and political barriers.
Raúl Carrillo, on the other hand, wasn't against digital currency technology per se but took issue with the idea of a CBDC centralized under the Federal Reserve. Carrillo raised concerns about financial surveillance, emphasizing that blockchain technology is not a guaranteed solution for ensuring privacy.
Aspirationally, blockchain hides sensitive data about users, but in practice, blockchain systems necessarily interface with the surveilled infrastructure of the rest of the internet.
The debate about the necessity and feasibility of a digital dollar comes amid legislative proposals, including HR 3402 and HR 3712, scrutinizing CBDCs. These bills would require explicit congressional authorization for a CBDC and prohibit CBDC research.
The recent subcommittee hearing made it clear that the notion of a US CBDC faces significant resistance from legislators and industry experts. Concerns range from potential damage to the commercial banking system to compromising individual liberties. With legislation under consideration and an executive order mandating CBDC research issued earlier this year, the debate surrounding digital dollars will continue evolving.
