According to a former senior counselor in president Joe Biden’s administration, the introduction of a digital dollar for the United States would “crowd out” the cryptocurrency ecosystem and safeguard the country’s security.
During a Senate Banking Committee hearing on February 28, Daleep Singh, a former deputy national security adviser for international economics in the Biden administration, made the remarks, implying that cryptocurrencies aid in ransomware attacks and help people avoid US sanctions.
The adoption of a Central Bank Digital Currency (CBDC) by the U.S. government, according to Singh, “is the single best measure that we could take [to defend national interests] because it would drown out the ecology of crypto.”
In his explanation of a CBDC, Singh defines “crowding out” as a desirable outcome, whereas economists often use the term to refer to how government initiatives might reduce or eliminate investments made by private companies, which could restrict job creation and hinder economic growth.
Franklin Noll, the CEO of the consulting company Noll Historical Consulting, made a similar argument in a May 2022 interview with Cointelegraph. He said: “The disadvantage for crypto is that CBDCs will strive to drive out private cryptocurrencies, particularly stablecoins focusing on retail payment regions. Cryptocurrencies will continue to operate in certain payment system niches where they fulfill particular purposes and provide specialized services.
Although China has adopted its own CBDC, the United States is currently investigating the possible advantages and dangers of CBDCs. In an interview with Bloomberg on March 1, Yana Fanusie, the policy director at the crypto advocacy organization Crypto Council for Innovation, indicated that China is “driving the way” in CBDC development while the U.S. is “on the sidelines.”
The development of alternative financial systems, he said, may cause “trouble” for the United States because they would reduce the “potency” of its ability to impose sanctions.
Some people are more opposed to the digital currency proposals than others, such Congressman Tom Emmer, who on February 22 proposed legislation that would prohibit the Federal Reserve from enacting monetary policy based on a CBDC and from issuing digital dollars to people directly.
Emmer is worried that a CBDC may affect Americans’ financial privacy and turn into a “dangerous monitoring weapon.”
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