Digital Dollar would safeguard national security: Ex-Biden advisor

China has already launched its own central bank digital currency (CBDC), while the United States is still evaluating the advantages and drawbacks of CBDCs

By Shashank Bhardwaj

Published: Mar 1, 2023 05:59:31 PM IST

Full Bio

Daleep Singh; Photo by Oliver Contreras/ The Washington Post via Getty Images

Daleep Singh, a former adviser in President Joe Biden's administration, stated during a Senate Banking Committee hearing on February 28 that the development of a digital dollar for the United States could displace the crypto ecosystem and safeguard national security.

Singh argued that crypto assets aid ransomware attacks and enable the circumvention of U.S. sanctions.

Singh considers the adoption of a central bank digital currency (CBDC) by the U.S. government as the most effective measure to protect national interests because it would displace the crypto ecosystem.

Although "crowding out" is typically used by economists to describe how government investment can decrease or eliminate private investments, Singh sees it as a positive outcome when discussing the CBDC.

Franklin Noll, the President of Noll Historical Consulting, stated in an interview that central bank digital currencies (CBDCs) could displace crypto, particularly stablecoins targeted at retail payment markets.

According to Noll, CBDCs may reduce the need for private crypto, and they could be limited to certain areas of the payment system where they provide unique functions and specialised services.

China has already launched its own central bank digital currency (CBDC), while the United States is still evaluating the advantages and drawbacks of CBDCs.

According to Yana Fanusie, the policy leader at the Crypto Council for Innovation, China is at the forefront of CBDC development, while the U.S. is lagging behind. He cautioned that the development of alternative financial systems could pose a challenge to the U.S. as it could impact the effectiveness of its ability to impose economic sanctions.

Representative Tom Emmer is among those who are sceptical of the United States' plan to launch a digital dollar. He introduced a bill on February 22 that would prevent the Federal Reserve from using a CBDC to set monetary policy and issuing a digital dollar directly to citizens.

Emmer is concerned that the implementation of a CBDC could jeopardise the financial privacy of U.S. citizens and become a "harmful surveillance instrument."

Shashank is the founder of yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash