- The concept of a digital dollar was discussed by the Committee on Banking, Housing, And Urban Affairs on Tuesday
- Chris Giancarlo and Paxos CEO Charles Cascarilla were among the witnesses
- The talk was broadly positive, suggesting progress may be forthcoming
The concept of a digital dollar was discussed in the US Congress again this week, with the Committee on Banking, Housing, And Urban Affairs meeting remotely to discuss ‘The Digitization of Money and Payments’. In a notably upbeat and optimistic series of exchanges, the senators quizzed the witnesses on their concerns of a Central Bank digital currency (CBDC), but overall the mood was one of positivity and showed an increase in knowledge and understanding by committee members.
Covi-19 Has Ushered in a Digital Financial Revolution
Senator Mike Crapo opened proceedings by stating that the coronavirus pandemic has “forced us to go ‘all digital’ at a rapid pace”, and also caused lawmakers and financial bodies to “re-examine issues of financial inclusion and consider different ways to think about money and payments.”
Praising the “new technologies like digital wallets and mobile money transfers”, Crapo added that there are “legitimate questions about certain stablecoins and digital currencies” but is clearly bullish on their potential, summarizing that, “It seems to me that these and other similar innovations are inevitable, beneficial, and the US should be the lead in their development.”
Chris Giancarlo, former chairman of the Commodity Futures Trading Commission, joined Charles Cascarilla, CEO and co-founder of Paxos, in calling for an overhaul of what Cascarilla called the “antiquated plumbing” of the current US financial system. Giancarlo added that what worked in the 20th century was “falling behind” in the 21st.
Digital Dollar Would “Futureproof the Dollar”
On the subject of a digital dollar, which Giancarlo called the necessity to “futureproof the dollar today for a digital tomorrow”, the seven senators on the committee struck a surprisingly bullish tone, with the biggest note of concern being the issue of access and inclusivity. Professor Nakita Cuttino of Duke University School of Law noted that 25 million people in the US don’t have internet access and 45 million don’t have smartphones, with the committee warning that any digital revolution must not exclude these people, especially as the idea of ‘banking the unbanked’ is one of blockchain’s main advantages.
Digital Yuan Causes Concern
The committee also seemed well versed on China’s efforts to create a digital yuan, with Giancarlo warning that the Chinese plans were “directly targeting” some of the pillars that currently hold up the US dollar as the world’s reserve currency. Despite the potential of losing out ground in the monetary digitization race, Senator Mark Warner summed up the committee’s feelings:
I think a central bank digital currency really offers some exciting opportunities…[but] we still have a long way to get this balance right between the impact of a CBDC on monetary policy, privacy, and financial stability.
This cautiously optimistic stance shows that progress has been made on the subject of blockchain and a digital dollar in recent months, spurred on no doubt by the threat of Chinese dominance in the space and the coronavirus pandemic.
