US Senate Committee Holds Virtual Meeting Discussing CBDC

A new virtual meeting was held by the US Senate Committee, where the topic of a central bank digital currency (CBDC) was again mentioned. The Committee on Banking, Housing, and Urban Affairs conducted the meeting which lasted for around two hours and was titled  “The Digitization of Money and Payments.”

It discussed competing with China and its CBDC offering, the financial inclusion, as well as modernizing the current US economic model. The former Chairman of the US Commodity Futures Trading Commission (CFTC), Chris Giancarlo, took the lead in tabling the senator questions. He shared his insights into how a US digital currency could work.

While previously the crypto news showed mixed signals coming from this Committee on whether a United States based central bank digital currency (CBDC) would ever see the light of day, everything seems to have changed. The hearing from yesterday shows that the matter has become a pressing concern as of lately.

The Committee Chair and Senator Mike Crapo, opened the discussion and stressed the importance of implementing a US digital currency. As he said, this is vital to defending the dollar’s status as a major world reserve currency. Giancarlo noted that “these and other similar innovations are inevitable, beneficial and the US should be the lead in their development.”

When it comes to the crypto regulation news, there is no strict plan. However, Giancarlo assured Senator Crapo in response to his point and said that the sturdy “pillars” which uphold the US financial dominance, remain in place. However, initiatives by China such as the free trade zone in the east and the Belt and Road scheme may chip away at those “pillars.”

“Nevertheless, the Chinese efforts and some other efforts are directly targeting some of those pillars. The U.S. dollars’ dominance is based on an account based global banking system. The moved toward a digital yuan by China is meant to bypass the accounts based system and allow for direct payments.

Then, Giancarlo noted the need for a digital dollar by bringing up commodities trading. The US Senate Committee said that major commodities trade in dollars, but the process is becoming increasingly digitized.

That said, in order to meet the demand of users of dollars, it makes sense to digitize the dollar.

Doing this would create seamless interaction and would fend off competition from other digital currencies.

“I believe it’s also vitally important that the dollar itself also becomes digital in order to interact with those commodities. Otherwise, other country’s digital money will be able to interact with them,” he noted.

Without digitalization, Giancarlo believes that the dollar would become as irrelevant as a “flip phone.”