US officials call for launching a CBDC to compete with China

China’s efforts in developing the digital yuan (e-CNY) could harm the U.S. economy and undermine the dollar’s status as the world’s reserve currency. This conclusion was reached by participants in a hearing of the House Financial Services Committee.

Five committee members voted in favour of developing a national “stablecoin” or CBDC, citing competition from China. The procedure was for clarifying the position, not a direct call to action, writes Decrypt.

Also invited to the hearing were Ari Redbord, head of Legal Affairs and Government Relations at TRM Labs, and Jonathan Levin, co-founder of Chainalysis.

The latter noted that in developing a financial instrument the U.S. should protect both property rights and privacy. Redbord agreed with Levin’s position on the need for “a digital asset that upholds values,” so that potential investors have the option to buy it instead of the e-CNY.

The speakers expressed concern about the threat posed by China’s growing financial presence as a competitor to the U.S. economy. In particular, Republican Congressman French Hill said authorities should take steps to preserve the dollar as the “world’s reserve currency.”

Atlantic Council research fellow Dr. Carla Norrlof noted that the PRC is developing a CBDC precisely to compete with the U.S. dollar. She did not rule out that the United States would feel pressure from other states.

“This is not simply a problem [related to] China; it is a broader problem. Currently, around 104 countries are studying CBDCs.”

Earlier, China expanded testing of the digital yuan in Sichuan, Hebei, Jiangsu and Guangdong.

In spring 2022, former head of the People’s Bank of China Zhou Xiaochuan noted that the e-CNY is primarily intended for the general public and merchants, and not to replace SWIFT or “turn currency into a weapon”.

In March, US Senator Pat Toomey warned about the threat of the digital yuan to US national security.

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