In a hearing before the Senate Banking Committee today, June 30, digital coins issued by a central bank (CBDC) took center stage before an audience of senators seeking to improve financial infrastructure and expand financial inclusion in the country.
Witnesses and concerns
The banking committee welcomed Paxos CEO Charles Cascarilla, Duke professor of financial inclusion and researcher Nakita Cuttino, and former CFTC president and current Digital Dollar Project champion Chris Giancarlo as witnesses.
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Cascarilla provided experience on how existing stable currencies operate and the gaps in current finances that they fill. In his words: „stablecoins address the outdated plumbing in our financial system“.
„We need to address the frictions that exist with the payment system now,“ Cuttino said. „Of course, with innovation comes a reduced cost. Given the focus of his research, Cuttino provided the greatest insight into the specific concerns of the unbanked:
„Any solution should have low transaction costs. In the early days of Bitcoin, the transaction cost was extremely high, and it remains extremely high.
As an active lobbyist for a US CBDC, Giancarlo promoted a digital dollar as a radical upgrade to an obsolete system. „The world is wondering what role America will play in the future of money. The choice is to take a leadership role or accept that others will lead and enshrine their values in money,“ Giancarlo said.
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Committee and party line leadership
As has been the case with many hearings on cryptomonics and blockchain technology, the party dialogues produce different talking points.
Committee Chairman Mike Crapo (R-ID) warned that „America must have clear rules on the road that protect businesses and consumers without stifling innovation,“ reflecting a broad desire to support business. Many Republican committee members emphasized competition with China, which appears to be far more advanced on a digital yuan than the United States on a digital dollar.
On the other hand, many Democrats in the committee were suspicious of repeated claims that technology would save vulnerable groups. „It’s hard to think of revolutionary products or services that have really helped people [technology companies] say they will,“ said ranking member Sherrod Brown (D-OH). „Why on earth would we trust big technology with our banking system?“
In many ways, these are inevitable talking points. The interest in a CBDC is clearly there. No one on the committee was happy with the current system. Today’s hearing seemed more a discussion of „how“ rather than „if“ the United States should develop a CBDC, coinciding with a global shift in the conversation over the past six months.