There is a movement underway in the United States aimed at introducing a CBDC or central bank digital currency. As part of the White House’s first-ever comprehensive framework, the Treasury Department is now proposing the creation of a national stablecoin, or CBDC.
In a bid to counter China’s progress on CBDCs, five panelists voted in favor of some form of national digital currency in the United States at a hearing of the U.S. House Financial Services Committee on Tuesday.
CBDC is often defined as the digital responsibility of a central bank that is easily accessible to the public. Today, Fed bills are the only central bank currency available to the American public.
CBDCs typically run on a blockchain network but are centralized and regulated by the issuing country, which would enable the public to make digital payments, similar to existing forms of real cash.
Tuesday’s hearing, hosted by the U.S. House of Representatives Subcommittee on National Security, International Development and Monetary Policy, is titled “Under the Radar: Alternative Payment Systems and the Implications of Their Growth for National Security.”
China is moving ahead with the development of its digital yuan. Image: FDI China
CBDC – “Consistent Demand”
Guam Representative Michael San Nicolas has asked a panel of witnesses to vote “on the record” to determine the extent to which the U.S. government needs to develop a digital currency.
All five speakers agreed that there was a “unanimous need”.
A unanimous vote by the group does not ensure the development of a CBDC in the United States. While the decision was only intended to clarify the panel’s position, the hearing and its main findings suggest that a CBDC is likely to emerge in the near future.
The hearing followed Biden’s March executive order, in which he not only described the government’s digital asset strategy, but also asked numerous government agencies to make policy recommendations on the approach.
CBDC wars: Has China won the US?
During Tuesday’s hearing, panelists expressed concern about the threat posed by China’s financial presence as a rival to the U.S. economy. Dr. Carla Norrlof, non-resident senior fellow at Atlantic Legal Counsel, explained that China is building its own central bank digital currency to compete with the U.S. dollar.
Scott Dueweke, a researcher at the Wilson Center, noted that China’s CBDC is part of the country’s efforts to “gather demographic information.”
While the United States discusses the prospect of forming its own stablecoin, China has been making progress in its CBDC experiment.
According to the South China Morning Post, the People’s Bank of China will begin testing its new digital version of the yuan in four other Chinese regions.
Meanwhile, President Biden often defines his vision for America in one word: opportunity. The “digital dollar” may not seem credible, but given its advantages in technology, the US has enough money to turn things around.
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