American economic advisor said CBDC is "the single best step" the US government can take as it "would crowd out the ecosystem of crypto."
Daleep Singh, an American economic advisor who was a Deputy National Security Advisor for International Economics in the Biden administration, says the launch of the United States central bank digital currency (CBDC) would help protect US national security by “crowding out” the crypto ecosystem.
“Crowding out” is a phrase usually used by economists to refer to a phenomenon that happens when government and private industry competes “for access to the same funds.” This can cause a reduction in private-sector investment.
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In particular, Daleep Singh highlighted that the US government's steps towards launching a digital dollar would be “the single best step that <US> could take because it would crowd out the ecosystem of crypto.”
On top of that, in his speech during the Senate Banking Committee hearing, Singh emphasized that cryptocurrencies play a key role in helping malicious actors to carry out ransomware attacks and avoid US sanctions.
Daleep Singh is not the only person thinking that US CBDC could crowd out the crypto ecosystem. Last year, the president of Consulting firm Noll Historical Consulting, Franklin Noll, stated:
The downside for crypto is that CBDCs will work to crowd out private cryptocurrencies, especially stablecoins focused on retail payment areas. Cryptocurrencies will stay in niches in the payment system where they serve unique functions and provide specialized services.
While the authorities in the United States are only considering the benefits and risks of central bank digital currency, according to Crypto Council for Innovation policy lead Yana Fanusie, China is “leading the way.”
In September 2022, the People’s Bank of China (PBOC) revealed plans to expand its Central Bank Digital Currency (CBDC) trials in four provinces, including Guangdong, Jiangsu, Hebei, and Sichuan.
