Lawmakers Admit the US is Behind China in CBDC Race

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  • Congressional lawmakers concede China is far ahead of the US when it comes to CBDC creation and circulation.
  • US lawmakers are concerned regarding the inactivity around CBDC development.
  • Congressmen have stressed that a digital dollar should not stir up privacy concerns.

Congressional lawmakers concede China is far ahead of the US when it comes to Central Bank Digital Currency (CBDC). In a hearing dubbed “The Promises and Perils of Central Bank Digital Currencies,” the US lawmakers proceeded to ask industry experts how long it would take the US to catch up.

In the hearing, a number of lawmakers expressed concerns regarding the inactivity of the US around CBDC. Congressman Jim Himes questioned if the inactivity would hinder the US to lead and innovate in the field. “Is it three months? Three years?” he asked.

In response, Dr. Julia Coronado, founder at MPP and a Clinical Associate Professor of Finance at the McCombs School of Business, asserted that it would be non-viable to gauge how far behind the US really is. “What I would look for as a sign that the U.S. has missed the mark of the train leaving the station would be wide-scale adoption of a central bank digital currency and cross-border leaps,” she then added.

Digital Dollar Not to Raise Privacy Concerns

Robert Baldwin, Head of Policy at ADAM, was rather optimistic. He pointed out the privacy concerns associated with the digital yuan and concluded that might even force more traders toward a digital dollar. He said:

The U.S. needs to catch up to Chinese development, but when the U.S. presents its own alternative there is an obvious incentive for the current system to utilize an American-based system.

Other congressmen also emphasized that a digital dollar should not stir up privacy concerns, delineating such attributes could give the digital dollar an edge over competitors. “Any attempt to craft a central bank digital currency that enables the Fed to provide retail bank accounts and mobilizes the CBDC rails into a surveillance tool, able to collect all sorts of information on Americans, would do nothing but put the United States on par with China’s digital authoritarianism,” Rep. Tom Emmer said.

The US is one of the latest countries to explore the possibility of a CBDC, as the country showed serious interest in the matter just this year. On the other hand, China has been working to develop a CBDC starting 2014, and the country is extremely close to a full roll-out considering it has successfully conducted several pilots.

Jerome Powell, Federal Reserve chairman, has previously said that the US will not race China in terms of developing a CBDC. “Far more important to get it right than it is to do it fast. The currency that’s being used in China is not one that would work here. It’s one that really allows the government to see every payment for which it is used in real time,” Powell said.