In brief
- Scott Bessent said a CBDC would be a “sign of weakness” in the U.S.
- Conservatives have portrayed CBDCs as a threat to financial privacy and sovereignty.
- An expert said a CBDC is “on the backburner in many ways.”
U.S. Treasury Secretary Scott Bessent affirmed on Tuesday that he is not in favor of debuting a central bank digital currency, or CBDC, under President Donald Trump’s administration, throwing shade on the concept of a digital dollar during Congressional testimony.
“We believe that digital assets belong in the private sector, and my personal view is that having a central bank digital currency is a sign of weakness, not strength,” he said before the House Appropriations Committee’s Subcommittee on Financial Services and General Government.
Although Federal Reserve Chair Jerome Powell confirmed in February that the central bank does not intend on issuing fiat currency in digital form, conservatives like House Majority Whip Tom Emmer have rallied against establishing a CBDC in the U.S. for years. Last month, his Anti-CBDC Surveillance State Act was passed out of committee with a 27-22 vote.
On Tuesday, Rep. Chuck Edwards (R-NC), a co-sponsor of Emmer’s bill, asked Bessent for his stance on a CBDC. Many of Edwards’ constituents are concerned about the security and privacy of such a currency, the lawmaker added.
Bessent appeared to say that a CBDC is not needed in the U.S., from the perspective of managing foreign bank reserves, because assets like U.S. Treasuries already offer sufficient exposure to the greenback, which also benefits from a dominant role in global trade.
“If a reserve manager or foreign central bank holds U.S. dollars, then there is a wide variety of U.S. assets that they can invest in,” he continued. “You would create a central bank digital currency just for ease of use because there are no good choices for underlying assets.”
Bessent’s comments on Tuesday echoed Congressional testimony in January. Prior to his confirmation, Bessent said he sees “no reason” for the U.S. to issue a digital dollar.
Days after his inauguration, Trump signed an executive order “prohibiting the establishment, issuance, circulation, and use of a CBDC” within the U.S., fulfilling a campaign promise that he made last year. A CBDC would enable the government to “take your money,” he had warned at a rally in New Hampshire.
Although Trump’s order makes the launch of a CBDC a less pressing concern, a bill from Congress like Emmer’s would be more permanent, Nicholas Anthony, a policy analyst at the Cato Institute, a libertarian think tank, told Decrypt.
“The executive order is not permanent, so things can change with the next administration,” he said. “Things can [also] change rapidly if there’s an emergency, like a recession, and policymakers start reaching into the depths of the toolbox.”
During his run for the Republican presidential nomination, Florida Governor Ron DeSantis was among hopefuls that stumped against CBDCs on the campaign trail. The conservative warned that the tech could be used to limit purchases of consumer goods like red meat or gasoline.
CBDCs resemble stablecoins as tokens pegged to the price of a fiat currency, such as the U.S. dollar. However, they are maintained and controlled by the government, instead of being issued by private companies on public blockchains.
Over 100 nations worldwide are currently researching, developing, or piloting a CBDC, according to the Atlantic Council. Only Jamaica, the Bahamas, and Nigeria have fully launched CBDCs, as China and Russia continue with years-long pilot programs.
When the Biden administration issued an executive order in 2022 directing the U.S. government to investigate what technical infrastructure would be needed for a CBDC, the issue was relatively pressing compared to today, Anthony said. But a CBDC is still a threat, he added.
“Members of Congress were calling for a CBDC left and right, and there were people in the public that also wanted it,” he said. “Now we’re at a time where it’s facing a lot of well deserved criticism, and that’s really put it on the back burner in many ways.”
Edited by James Rubin
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