In another example of China driving Congress’ agenda, a House task force will on Tuesday hold its second hearing in two weeks on a U.S. digital dollar, a technology that some lawmakers see as essential if the U.S. is to maintain its global economic dominance.
“The U.S. dollar is the reserve currency, but the longer we wait to adopt a cryptocurrency that maintains privacy, the more threatening the digital yuan could become,” said Minnesota Rep. Tom Emmer, the ranking Republican on the House Financial Technology Task Force. “Which is why the Fed needs to have a little bit more of a jump when it comes to this.”
At issue is whether the Federal Reserve should issue a central bank digital currency. Advocates of such a CBDC say the U.S. has at least three characteristics that would give such a digital dollar an edge over the yuan globally: trust in the U.S. courts, superior privacy protections and a robust financial services sector.
But with the Chinese government working on a digital yuan since 2014, and with pilot programs in four cities already running and more coming, the U.S. risks being left behind. Fed Chairman Jerome Powell said only last month that the central bank will release a discussion paper this summer exploring the possibility of issuing a U.S. digital currency.
In one sense, a government-backed digital dollar is an electronic form of cash. Two parties exchange the digital dollar for a good or service. The exchange requires no third parties and can settle instantaneously. Anybody with a smartphone and access to the digital dollars can participate.
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Digital dollar backers say privacy, trust give US edge over China - Roll Call
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