The US Congress is giving us whiplash. Legislators go from considering central bank digital currencies, to including then excluding digital dollars from stimulus bills at the drop of a hat. The debate continued last week in the US Senate Banking, Housing and Urban Affairs Subcommittee on Economic Policy during a hearing on “Winning the Economic Competition” between China and the US.
While the majority of the discussion was taken up considering non-digital asset topics, Former Commodity Futures Trading Commission Chairman Christopher Giancarlo flew the flag for digital assets and advocated for the rollout of pilot programs to test out different facets of a blockchain based tokenised US dollar.
Giancarlo's proposal has the support of a few members of Congress, including Senator Tom Cotton (R-Ark.) who is chairing the subcommittee. During the hearing, Cotton said of the importance of the US dollar:
For us, maintaining the dollar’s supremacy is not only an economic matter, it is a critical strategic matter as well. It is what allows us to have such effective sanction regimes around the world as well as other benefits,
Congress has clearly taken to heart Mark Zuckerberg's testimony before the US House Financial Services Committee on Wednesday, 23 October 2019 regarding Libra, where he said that:
While we debate these issues, the rest of the world isn’t waiting. China is moving quickly to launch similar ideas in the coming months. Libra will be backed mostly by dollars and I believe it will extend America’s financial leadership as well as our democratic values and oversight around the world. If America doesn’t innovate, our financial leadership is not guaranteed.
This also echos the Bank of Canada's approach (see here and here), that Bank is developing a digital currency capability but holding off on deploying it for now, unless an emergent threat to the Canadian Dollar challenges Canada's monetary sovereignty.
The question remains, where does this leave Australia, as we eagerly await the Reserve Bank's continuation of their CBDC experiments.