On Wednesday, Sept. 20, the United States House Financial Services Committee marked up two bills to curb the issuance of a central bank digital currency (CBDC). One of the bills would stop the Federal Reserve from running any test programs on CBDCs without congressional approval, while the other would stop federal banks from using CBDCs for some services and products.
The principal political adversaries to a digital dollar are heavyweights such as Robert F. Kennedy Jr. and Florida governor Ron DeSantis, who have thrown their hats into the ring to become president a year from November.
In May, Cointelegraph reported that according to its own research, more than 130 countries were at some stage of research into a CBDC, and only eight had rejected the idea outright. These countries are diverse, from France and Switzerland to Haiti and Bhutan. So, the question must be asked: Why would a country like the United States be so opposed to having its own digital currency?
The idea of a CBDC in itself is nothing too taxing. In essence, digital dollars would be based on blockchain technology rather than having traditional dollars moving around between accounts. That would dramatically decrease transfer times, cut fees, and do away with the “middlemen” — the intermediaries along the way who slow things down and take a cut for themselves.
The Federal Deposit Insurance Corporation found that in 2021, there were still 5.9 million “unbanked’ households in the United States, a massive number by any standard.
A CBDC would mean that the Federal Reserve would effectively oversee all the bank transfers in the country, as there would be no alternative. And having everything under one roof means one mistake or failure would affect everyone rather than be limited to one bank, for instance.
But perhaps the biggest argument against a CBDC is that, for cryptocurrency purists, having a central institution overseeing a currency is the very thing crypto was designed to avoid. Why now make a U-turn?
Political motivations play a significant role in the discussion in the United States. In March 2022, President Joseph Biden said his administration would “place the highest urgency on research and development efforts into the potential design and deployment options of a United States CBDC.”
This provided fodder for the Republican party to come out against the plan, citing invasion of privacy and claiming it was another form of government control. DeSantis even came out with an Orwellian prediction of the government stopping its citizens from buying fossil fuels or guns if such legislation were in place.
This is not to say that the U.S. hasn’t looked into a CBDC, as it has extensively.
In 2020, the Federal Reserve launched Project Hamilton to study the viability of a CBDC. By 2022, it had developed a system that took elements from the workings of Bitcoin but moved away from its rigid blockchain backbone. The result was a system that can process 1.7 million transactions per second, light years ahead of the Bitcoin blockchain and quicker even than Visa, which can deal with about 65,000 transactions per second.
David Millar, data center coordinator at Santander, told Cointelegraph: “The leaps forward they made during Project Hamilton were truly staggering. When we heard of the progress they were making, we believed that our entire infrastructure would need to be completely revamped within the next five years.”
Nevertheless, the project completed its initial phase in December 2022 and went no further. Once again, voices of dissent from Congress attacked the project, saying it had been carried out solely with academics and the public sector in mind and the average citizen would not benefit. Millar added:
“The time and effort that went into Hamilton and the results they produced; it’s a tragedy that most of it will never see the light of day.”
The issue of privacy is one of the most prominent foes of the digital dollar. The main argument of the dissenters is that if there is to be a digital dollar, it should effectively be like the cash dollar is now, with its benefits of anonymity coupled with the power and speed of a cryptocurrency. Those who favor a digital dollar argue that we already have such a thing, but it’s just not called that yet. Credit card money is digital for all intents and purposes, and are any of us mailing cash to Amazon to pay for things?
The world is moving toward a cashless society, and the U.S. is no exception. In 2022, only 18% of all U.S. payments were made in cash, down from 31% in 2016.
The U.S. is also a country of strange contradictions. While it surges ahead in many areas, such as technology, its banking system remains rooted in the traditional, with check payments still being the norm. Dragging a whole nation away from that is a tall order.
So, what does the future hold for a potential U.S. CBDC? Well, very little. Project Hamilton closed with no indication of a second phase, and according to Darrell Duffie, a professor of finance at Stanford’s Graduate School of Business, while work is continuing, it has slowed to a snail’s pace, and “nobody is charging ahead openly.”
It seems for the foreseeable future, this will be one part of the cryptosphere where the U.S. is not a pioneer.
The Chamber proposes adding a field to the form for brokers to indicate if a digital asset has a different tax rate, such as NFTs taxed as collectibles, to prevent errors and ensure accurate reporting.
Mohammed Idris, Nigeria’s Minister of Information and National Orientation emphasized that Gambaryan enjoys full consular support from his home government.
Nigel Farage has reiterated that he blames the West and NATO for the Russian invasion of Ukraine – as he confirmed that he previously said he “admired” Vladimir Putin as a statesman.
Speaking to the BBC, the Reform UK leader was asked about his previous comments on Russia and Ukraine.
Asked about Russia’s 2022 invasion, Mr Farage told Nick Robinson that he had been saying since the fall of the Berlin Wall that there would be a war in Ukraine due to the “ever-eastward expansion of NATO and the European Union”.
He said this was giving Mr Putin a reason to tell the Russian people “they’re coming for us again” and go to war.
The Reform leader confirmed his belief the West “provoked” the conflict – but said it was “of course” the Russian president’s “fault”.
Image: Mr Farage was asked about the war in Ukraine. Pic: Reuters
Previous comments Mr Farage made about Mr Putin were also put to him.
He was asked about comments he made in 2014 stating that Mr Putin was the statesman he most admired.
Mr Farage said he disliked the Russian leader – but “I admired him as a political operator because he’s managed to take control” of running the country.
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“This is the nonsense, you know, you can pick any figure, current or historical, and say, you know, did they have good aspects?” he added.
“And if you said, ‘well, they were very talented in one area,’ then suddenly you’re the biggest supporter.”
Conservative candidates – who may be feeling the threat of a Reform surge in the polls – were quick to condemn the Reform leader.
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Home Secretary James Cleverly said Mr Farage was “echoing Putin’s vile justification for the brutal invasion of Ukraine”.
Deputy Conservative chair Jonathan Gullis added that Putin is “certainly not someone who should be admired” – adding that he “unleashed chemical warfare on the streets of our country to commit murder, which endangered further innocent British lives”.
Labour’s shadow defence secretary, John Healey, said: “These are disgraceful comments, which reveal the true face of Nigel Farage: a Putin apologist who should never be trusted with our nation’s security.
“Up until now, there has been a united front amongst Britain’s political leaders in supporting the people of Ukraine against the unprovoked and unjustifiable assault they have suffered at the hands of Vladimir Putin.
“Nigel Farage has put himself outside that united position, and shown that he would rather lick Vladimir Putin’s boots than stand up for the people of Ukraine. That makes him unfit for any political office in our country, let alone leading a serious party in parliament.”
The former UKIP leader said this is what “the Conservatives have done with it”.
“If you put me in charge it’d be very, very different,” he claimed, “but of course they didn’t do that, did they?”
On his party’s climate policies, Mr Farage said he wants to “go for nuclear energy” and scrap the existing net zero programme.
He rejected that he was “arguing the science” on climate change, but that “we spend too much time hyperventilating about the problem, rather than thinking practically and logically what we can do”.
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Mr Farage added that King Charles – who was then a prince – made a “very stupid comment” when he said carbon dioxide was a pollutant.
The Reform leader then said that, by deindustrialising, the CO2 production had been sent offshore to places like India and “all we’ve done is to export the emissions”.