'The US Is So Far Behind': Maxine Waters Laments Opposition To CBDC Developments

4 months ago

During Thursday's debate on the House floor, Rep. Maxine Waters (D-CA) spoke in opposition to HR 5403, the CBDC Anti-Surveillance State Act.

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Transcript

00:00 >> Then a woman from California is recognized.

00:01 >> Madam Chair, I yield myself much time as I may consume.

00:11 Again, I yield myself as much time as I may consume.

00:15 [BLANK_AUDIO]

00:25 I rise in strong support to HR 5403, which would not only

00:36 prohibit the issuance of a central bank digital currency, or CBDC.

00:44 But would go so far as to prohibit the Federal Reserve from holding bank

00:48 reserves that are critical to operating payment systems and combating inflation.

00:55 Let me start with the harmful implications of the bill's prohibitions

01:00 on the issuance of CBDC.

01:02 A CBDC is a type of digital asset issued by a country's central bank,

01:11 which in the United States is a Federal Reserve.

01:14 Compared to other digital assets, CBDCs have a greater potential

01:20 to maintain a stable value, garner public trust, and

01:25 become a viable means of payment transactions.

01:28 There are two main types of CBDCs.

01:31 One, retail CBDCs that consumers could get from the Fed or

01:37 a financial institution to pay for everyday things like a cup of coffee.

01:42 And wholesale CBDCs that would not be used by individual consumers and

01:48 instead only used for transactions among financial institutions and the Fed.

01:54 CBDCs are no longer a remote, futuristic possibility.

02:00 134 countries and currency unions around the world,

02:07 representing 98% of global GDP, are currently exploring or implementing a CBDC.

02:15 Some have referred to the development of a CBDC as the next space race,

02:21 but the United States is way behind the curve.

02:25 What's more, there is growing concern that China,

02:30 which has already issued its own CBDC that has been used by hundreds of

02:35 millions of people, will be able to significantly influence

02:40 the rest of the world's CBDCs development because the US is so far behind.

02:47 This is especially problematic given the Chinese CBDC

02:52 has government surveillance baked in, while a United States CBDC

02:58 would be designed to protect consumer privacy and

03:02 other deeply held American values.

03:05 This bill exacerbates these concerns by proposing to make the United States

03:11 the first and only country in the world to ban a CBDC.

03:19 By allowing other countries, especially China, to race ahead of us,

03:24 H.R. 5403 directly threatens the primacy of the United States dollar.

03:30 Today, more than half of all international trade and

03:35 more than 90% of all foreign exchange transactions are done in dollars.

03:41 The dollar's dominance provides significant benefits to the United States,

03:46 like lower borrowing costs for consumers, lower capital costs for

03:51 United States businesses, and the ability to better implement US foreign policy goals.

03:57 In fact, the dollar's widespread use is what makes our sanctions so

04:02 powerful, allowing us to block adversaries like Russia and

04:07 Iran from doing business, not just with the United States, but

04:11 with anyone who uses the dollar.

04:14 That is why countries, including China and Russia,

04:18 are trying to establish an alternative to the dollar,

04:22 including developing alternative digital currencies so

04:26 they can more effectively evade United States sanctions.

04:30 CBDCs also have the potential to offer benefits compared

04:35 to United States dollars, like faster and cheaper transactions.

04:40 If the United States sits on the sidelines as other major economies move forward

04:45 with CBDC development, another digital currency, like the digital euro,

04:52 would very well become the world's preferred currency for international trade.

04:57 If this weren't bad enough, the nonpartisan Congressional Budget Office,

05:02 or CBO, has pointed out that the ban on CBDCs in this bill

05:08 can be interpreted to encompass the Federal Reserve Bank's reserves.

05:15 These reserves are instrumental to several core functions of the Fed,

05:20 including their ability to conduct monetary policy.

05:24 This means that HR 5403 would undermine the Federal Reserve's set of tools

05:32 needed to ensure our economy does not enter a recession as inflation comes down.

05:39 It also means that the bill could disrupt our banking system by preventing

05:44 the Fed from using payment systems like Fedwire to quickly move funds

05:50 between financial institutions.

05:52 And while some may think that this is merely a drafting error,

05:57 it appears to be deliberate.

05:59 During the markup of this bill, Democrats pointed out on the record

06:04 how this overly broad definition of CBDC could harm the Fed's broader ability

06:11 to conduct monetary policy.

06:13 Despite having every opportunity to fix the bill before it was considered here

06:18 today, Republicans have kept the language the same.

06:23 But let's not forget that Donald Trump has made clear intention to undermine

06:28 the Fed with repeated threats to fire the Fed chair when he was in office,

06:36 and more recently with reports that he'd want to set interest rates

06:42 from the Oval Office.

06:44 Furthermore, Project 2025, which is an extreme MAGA transition playbook

06:51 for a potential Trump administration, would abolish the Fed.

06:58 House Republicans have already entered a bill to do just that.

07:06 I urge members to see this bill for what it is.

07:08 It is not about protecting consumer privacy.

07:12 After all, our current financial system has a number of data privacy

07:18 shortcomings that this bill would do nothing to address.

07:22 Moreover, there is nothing inherent about a CBDC that would compromise privacy.

07:29 That is a design feature that is within our control.

07:34 This bill is instead an attempt to stifle US innovation and competitiveness

07:42 abroad and to undermine the federal agency that is the most critical

07:47 to fighting inflation.

07:49 Unbelievable.

07:51 I urge members to vote no on this bill.

07:53 Does the gentlewoman reserve?

07:59 I reserve.

08:01 You want to say, I reserve.

08:02 So what?

'The US Is So Far Behind': Maxine Waters Laments Opposition To CBDC Developments

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