The U.S. Senate Banking Subcommittee on Economic Policy will be holding a hearing titled, “Building A Stronger Financial System: Opportunities of a Central Bank Digital Currency” on Wednesday, Forbes reported.
It is a continuation of the push by the United States government to close the gap created by cryptocurrency and stay on par with other nations making moves to create digital currencies, especially China.
While the quest started back in October 4, 2019, when Congressmen French Hill (R-AK) and Bill Foster (D-IL) wrote a bi-partisan letter urging Congress to seriously consider a central bank digital currency (CBDC) or ‘digital dollar’ for the United States, the push has recently been heightened.
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In March, Hill and Foster had introduced the H.R. 2211 titled the Central Bank Digital Currency Study Act of 2021. The goal was to compel Congress to begin the walk to create digital currency for the United States following other countries.
According to the bill, a “…January 2021 survey by the Bank for International Settlements found that 86 percent of central banks, representing countries with close to 72 percent of the world’s population and 91 percent of global economic output, are currently or will soon be engaged in work relating to CBDC, with almost three-quarters of such central banks having moved beyond the research of CBDC to experimentation, proof of concept, or testing activities.”
In April, concerned that Chinese e-yuan, which had already had its third trial, will kick off a long-term bid to topple the dollar as the world’s dominant reserve currency, officials at the Treasury, State Department, Pentagon and National Security Council began to bolster their efforts to understand the potential implications.
American officials are less worried about an immediate challenge to the current structure of the global financial system, but are eager to understand how the digital yuan will be distributed, and whether it could also be used to work around U.S. sanctions.
Like China, Britain is exploring its own digital currency called Britcoin. Japan, Sweden and the EU are also in the race to create own digital currencies. The frenzy is getting contagious and the US is being rattled to speed up its CBDC project.
According to Forbes, the project has a list of witnesses including Dr. Neha Narula, Director, Digital Currency Initiative, MIT; Mr. Lev Menand, Academic Fellow and Lecturer in Law, Columbia Law School; The Honorable J. Christopher Giancarlo, Senior Counsel, Willkie Farr & Gallagher; and Dr. Darrell Duffie, Adams Distinguished Professor of Management and Professor of Finance, Stanford University Graduate School of Business.
One of the witnesses, Mr. Giancarlo, is also the former Chair of the Commodity Futures Trading Commission (CFTC) and founded the Digital Dollar Project (DDP), a non-profit initiative in D.C. supported by Accenture ACN -0.3%. The DDP announced it would be launching five pilot programs to explore CDBCs over the next 12 months. Last year, Giancarlo wrote an opinion piece in the Wall Street Journal sharing his belief in the importance of the U.S. figuring out how to introduce a ‘digital dollar’.
Another witness, Dr. Narula, is the lead at the MIT Media Lab focusing on cryptocurrencies and blockchain technology.
This has given the US CBDC project its biggest push so far. But it poses more threat to the dwindling cryptocurrency market. Many of the countries working on their CBDC, like China, have risen against cryptocurrency. There is concern that the US may turn against cryptocurrency as soon it establishes a path to its digital currency.
On Monday, former president Donald Trump told Fox Business that he sees Bitcoin as a “scam” affecting the value of the US dollar.
“Bitcoin, it just seems like a scam,” Mr. Trump said. “I don’t like it because it’s another currency competing against the dollar.”
The CBDC evolution appears to be setting the cryptocurrency market up for a crash. Already, the market is reeling at the mercy of the Chinese government who has been clamping down on miners and financial institutions dealing in cryptocurrencies.