Daleep Singh, former deputy national security adviser for international economics in the Biden administration, has taken an anti-crypto stance after saying that the introduction of US CBDC will "crowd-out" cryptocurrencies. The former adviser to Joe Biden said the government should focus on creating a digital dollar as it will help reduce interest in cryptocurrencies.
Mr. Singh believes that when there's a U.S. central bank digital currency (US CBDC) in place, it will help reduce citizens' focus on the US crypto industry. On Tuesday, Daleep Singh also mentioned that introducing the digital dollar would protect national security. But the former adviser to the Biden administration has provided insights into how it will help protect the security infrastructure of the US.
During Tuesday's U.S. Senate Banking Committee hearing, Singh said that the federal government embracing the introduction of CBDC "is the single best step that we could take [to protect national interests] because it would crowd out the ecosystem of crypto." Mr. Singh says this theory of crowding out the crypto ecosystem might work if implemented. When the US federal government embraces the CBDC idea, it can shift focus from the US crypto industry. Because of the increasing public sector spending, it moves the private sector spending, such as the crypto market, out of the spotlight.
The US Government Already Exploring a CBDC Economy
In the past, the US government was already exploring possibilities of a CBDC economy. The executive order issued by President Biden in March 2022 placed a high urgency on exploring the possibilities of moving to a CBDC ecosystem.
In the memo, the US president said, "The Order directs the U.S. Government to assess the technological infrastructure and capacity needs for a potential U.S. CBDC in a manner that protects Americans’ interests. The Order also encourages the Federal Reserve to continue its research, development, and assessment efforts for a U.S. CBDC, including the development of a plan for broader U.S. Government action in support of their work. This effort prioritizes U.S. participation in multi-country experimentation, and ensures U.S. leadership internationally to promote CBDC development that is consistent with U.S. priorities and democratic values."
Central Banks Worldwide Testing Digital Currencies
According to a report released by the Bank for International Settlements (BIS) in early May last year, many Central Banks worldwide are already testing the CBDC ecosystem. Their reports show China is currently ahead of the US in its tests and explorations.
Also, the reports from BIS show that many Central Banks around the world are also receiving legal rights to issue CBDC without the federal government's involvement. According to the report, "The issuance of a CBDC requires a legal framework that provides central banks with
the authority to do so. Compared with last year, the share of central banks with such
a legal authority increased from 18% to 26% (Graph 8).20 In addition, about 10% of
jurisdictions are currently changing their laws. Thus, more than a third of central banks
will soon have legal authority to launch a CBDC."