The United States is launching a campaign toward introducing a CBDC, or central bank digital currency. As part of the White House’s first comprehensive framework, the Treasury Department is now proposing the creation of a national stablecoin, or CBDC.
To counter China’s advances in CBDC, five panelists at the US House Committee on Financial Services hearing on Tuesday voted to adopt some form of US national digital currency.
A CBDC is generally defined as a digital liability of a central bank that is easily accessible to the public. Today, Federal Reserve Notes are the only central bank currency available to the general public in the United States.
CBDCs, which typically operate on a blockchain network but are centralized and controlled by the issuing country, will enable the general public to make digital payments, similar to existing cash.
Tuesday’s hearing, titled “Under the Radar: Alternative Payment Systems and the National Security Implications of Their Growth,” was hosted by the U.S. House Subcommittee on National Security, International Development, and Monetary Policy.
China is moving ahead with the development of its digital yuan. Image: FDI China
CBDC – A ‘Unanimous Need’
Michael San Nicolas, a representative from Guam, requested an “on-the-record” vote among the panel of witnesses to determine what degree the U.S. government needs to develop the digital currency.
All five speakers agreed that a “consensus need” exists.
The panel’s unanimous vote does not confirm the development of a CBDC in the United States. Although the decision was only meant to clarify the panel’s position, the hearing and its preliminary findings suggest that a CBDC is likely in the near future.
The hearing follows Biden’s March executive order, in which he not only outlined the government’s strategy for digital assets but also solicited policy proposals for the approach from numerous government agencies.
The CBDC War: Is China Winning Against the US?
During Tuesday’s hearing, panelists expressed concern about the threat posed by China’s growing financial presence as a rival to the U.S. economy. Atlantic Council non-resident senior fellow. Carla Norloff explains that China is creating its own central bank digital currency to compete with the US dollar.
Scott Dewey, a fellow at the Wilson Center, noted that China’s CBDC is part of the country’s efforts to “harvest people’s data.”
While the US is discussing the possibility of creating its own stablecoin, China is making progress with its CBDC experiments.
The People’s Bank of China will begin testing the new digital version of the Chinese yuan in four additional Chinese regions, according to the South China Morning Post.
Meanwhile, President Biden often defines his vision for the United States in a single word: opportunity. A “digital dollar” may seem unimaginable, yet the United States has the power to turn things in its favor thanks to its technological leverage.
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