US Treasury Secretary Steven Mnuchin, who has called Bitcoin and cryptocurriences a threat to national security, and Federal Reserve Chairman Jerome Powell, who has stated that the Fed is keeping a close eye on the developments of central bank digital currencies, say there’s no need for a digital US dollar.
Despite revelations that central bankers in France and China are in active pursuit of building a digital currency to expedite cross-border payments and to leverage the advantages of blockchain technology, Mnuchin is resolute.
“Chair Powell and I have discussed this. We both agree that in the near future, in the next five years, we see no need for the Fed to issue a digital currency.”
Mnuchin made the remark while speaking on Thursday at a House Financial Services Committee hearing in Washington, reports Bloomberg. The sentiment underscores a written response by Powell, who replied to US lawmakers urging him to explore the development of a digital currency – or risk getting left behind as governments around the globe prepare for a changing financial system.
“The Federal Reserve is not currently developing a U.S. dollar central bank digital currency (CBDC), but continues to carefully evaluate the costs and benefits of issuing a general purpose CBDC, defined as a new type of Federal Reserve liability that could be held directly by households and businesses.”
Mnuchin, a crypto skeptic who has consistently alluded to the dangers of digital currencies and how they can be co-opted by criminals and used for illicit transactions, also directly addressed questions about Facebook’s stablecoin project Libra, reports Bloomberg.
“I’m fine if Facebook wants to create a digital currency, but they need to be fully compliant. In no way can this be used for terrorist financing.”
Meanwhile, US Congressman Brad Sherman has assumed his new role as the Chair of the House Financial Services Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets.
Sherman, an outspoken Bitcoin basher who has pointedly stated that he would like to ban cryptocurrencies in the US, preventing Americans from buying and selling Bitcoin, Ethereum, XRP and all other crypto assets, is now tasked with protecting investors.
In his bid for the position, Sherman highlighted his extensive experience, having served on the Financial Services committee for over 22 years.
In a letter dated November 22, 2019, he wrote,
“As a former business attorney, and a 22 year veteran of the Financial Services Committee, I have a deep understanding of our capital markets, of the laws which protect investors, and the issues faced by entrepreneurs. The Subcommittee is also responsible for oversight of the Financial Accounting Standards Board, Municipal Securities Rulemaking Board, and Public Company Accounting Oversight Board. As Co-Chair of the CPA Caucus, I am uniquely well equipped to deal with these issues.”
European regulators are also pushing back against digital currencies. Although regulators do acknowledge the technological advances of digital assets, they caution against the risk of stablecoins, which are cryptocurrencies that can be pegged to other currencies or commodities to maintain a stable price.
According to a joint statement issued by the Council of the European Union and the European Commission, stablecoins can threaten the status quo on a massive scale, disrupting every form of monetary policy as their adoption accelerates and their reach spreads.
“So-called ‘stablecoins’ may present opportunities in terms of cheap and fast payments, especially cross-border payments. At the same time, these arrangements pose multifaceted challenges and risks related for example to consumer protection, privacy, taxation, cyber security and operational resilience, money laundering, terrorism financing, market integrity, governance and legal certainty. When a ‘stablecoin’ initiative has the potential to reach a global scale, these concerns are likely to be amplified and new potential risks to monetary sovereignty, monetary policy, the safety and efficiency of payment systems, financial stability, and fair competition can arise.”