Pros, cons and progress on a U.S. digital dollar:

Last week, during a virtual hearing before the U.S. Senate Banking Committee, senators spoke with expert witnesses about the pros and cons of developing a digital dollar.

Says Senator Tom Cotton (R-Ark), “The U.S. needs a digital dollar. The U.S. has to keep earning that place in the global payments system. It has to be better than Bitcoin…It has to be better than a digital yuan.”

The hearing primarily examined the role of central bank digital currencies (CBDCs) and potential to expand the availability of these currencies. Witness Chris Giancarlo, head of the Digital Dollar Project, described how congress could begin a digital currency initiative, saying that the country should start small, with a pilot program.

Reasons given for creating a U.S. digital dollar:

  • Increased financial inclusion
  • Cost reductions
  • Increased transparency
  • Address an outdated financial system

A U.S. digital dollar could also lead to more efficient financial distribution, as needed during the distribution of $1,200 stimulus checks to millions of Americans.

Despite the advantages of developing a national digital currency, some lawmakers harbor concerns. Ranking Member Sherrod Brown (D-OH) stated that tech companies shouldn’t be trusted in designing and implementing this technology. “It’s hard to think of any revolutionary products or services that have actually helped the people [that tech firms] say they will.”

The American Bankers Association stated that a digital dollar could turn the Federal Reserve into “the nation’s near-monopoly provider of currency, bank accounts and payment services.”

For more on the U.S. digital dollar debate, visit Forbes.