Hill Delivers Opening Remarks at Hearing to Examine the Implications of a Central Bank Digital Currency and Private Sector Alternatives

Hearing

"Today's hearing is titled, "Digital Dollar Dilemma: The Implications of a Central Bank Digital Currency and Private Sector Alternatives.'

We're here to better understand what central bank digital currencies are and the concept of digital money, to compare CBDCs to privately issued payment stablecoins, and how design choices would impact areas like consumer privacy, banks of all sizes, and monetary policy.

I'd also like for Members to hear from our witnesses not only about Communist China's proposed digital yuan, but what steps the United Kingdom and the European Union have taken and why.

So far, the conversation has focused on the Federal Reserve's legal authority to issue a CBDC. Look, the Constitution is clear--only Congress has the authority to coin money and regulate the value of such money.

We've heard the same from Fed officials right before this committee, and most recently from Vice Chair for Supervision Michael Barr, who last week, and I quote: "The Federal Reserve […] would only proceed with the issuance of a CBDC with clear support from the executive branch and authorizing legislation from Congress.'

The Biden Department of Justice agrees, saying, quote: "[There would be] substantial legal risks to issuing a CBDC without such legislation.'

So let me be unequivocally clear here for this audience: there is no support for a CBDC in Congress, except from those on the fringes who think somehow a CBDC might be an amazing solution to many unstated global problems.

Several members--Mr. Emmer, Mr. Mooney, and Mr. Auchincloss and I--have introduced bills stating the Federal Reserve does not have the authority to issue a U.S. CBDC.

I particularly want to thank Mr. Auchincloss, Mr. Torres, and Mr. Nickel for their work on our bill and demonstrating this isn't a controversial or partisan point of view.

Let me be clear, while a retail Federal Reserve issued CBDC is not in the cards, there are many significant areas for improvement in our U.S. payments system. We need less complaining, more facts and progress.

Payments can be modernized by modifying the existing payments infrastructure through innovations led by the private sector.

Some modifications have yet to be implemented, like expanding the days and hours of the Fed's wholesale payment services like the National Settlement Service or FedWire.

These developments would provide for instant payments for individuals and businesses through their financial institutions.

It's not OK that the Fed still hasn't finished this work even a decade later, with no clear timetable for its completion.

However, other improvements are already underway. The RTP network has been around since 2017, while the FedNow Service was recently launched in July.

Turning to innovations in blockchain payment rails, our committee marked up the Clarity for Payment Stablecoin Act in our Committee during July, which establishes a federal regime for payment stablecoins with strict reserve and capital requirements, disclosures, and attestations to protect consumers.

I want this hearing to explore whether a U.S. CBDC is the most efficient and effective means to address payments inefficiencies--or if in fact private-sector alternatives and improvements to our existing payment system and infrastructure can provide better immediate solutions.

I look forward to hearing our witness's perspectives.

I thank my colleagues on both sides of the aisle for their dedication to thoughtfully explore this issue.

Working together, we can modernize the U.S. payment system."

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