A chorus of disapproval rang out from the halls of the United States Congress on Sept. 14 as the House of Representatives Financial Services Committee digital assets subcommittee held a hearing on the “digital dollar dilemma.” Five expert witnesses were scheduled to testify at the hearing, and all of them argued against creating a U.S. central bank digital currency (CBDC), otherwise known as a digital dollar.
The five witnesses slated to speak at the hearing were Digital Asset CEO Yuval Rooz, senior vice president of the advocacy group Bank Policy Institute Paige Paridon, University of Pennsylvania Wharton School’s Christina Parajon Skinner, Norbert Michel from the think-tank Cato Institute and Columbia University lecturer Raúl Carrillo.
The hearing is explicitly dedicated to private sector alternatives to CBDC, but only Rooz was directly affiliated with a business.
Digital Asset is the creator of the Daml smart contract language and the Canton blockchain, which is backed by companies such as Microsoft, Goldman Sachs and Deloitte. In his prepared testimony, Rooz urges that any form of digital dollar should leverage existing technologies in the private sector.
#TODAY @ 2 PM – Subcmte RM @RepStephenLynch leads Democrats as the Subcmte on Digital Assets, Financial Technology and Inclusion holds a hearing entitled “Digital Dollar Dilemma: The Implications of a Central Bank Digital Currency and Private Sector Alternative”
— U.S. House Committee on Financial Services (@FSCDems) September 14, 2023
Paridon spoke about claims made by digital dollar supporters with counterarguments. She concentrated on issues that could arise within the banking system. Based on this list of potential risks, she concluded, “A CBDC could undermine the commercial banking system in the United States and severely constrict the availability of credit to the economy.”
Skinner set CBDC largely in a historical context, beginning with the apparent intentions of the Founding Fathers. She concluded:
“Introducing CBDC is likely to have certain costs to individual economic liberty by providing the State with more tools – and hence greater temptation – to establish command-and-control style public policy.”
The Cato Institute has a well-established record as an opponent of CBDC. Michel addressed technical and political issues and sees no good coming from a U.S. CBDC.