A central bank digital currency (CBDC) could provide benefits such as greater financial inclusion, but such a token would require a deep investment in research and development, an expert is expected to say before a U.S. Senate subcommittee hearing on Wednesday (June 9) entitled “Building A Stronger Financial System: Opportunities of a Central Bank Digital Currency.”
“Central bank digital currency might have the potential to increase financial inclusion, reduce transaction costs, and become a platform for innovation in payments, if designed and implemented in the right way. In order to determine and realize these benefits we must first invest deeply in multidisciplinary research and development,” Dr. Neha Narula, director of the Digital Currency Initiative at the Massachusetts Institute of Technology (MIT), wrote in written testimony posted online prior to the hearing.
The Honorable J. Christopher Giancarlo, senior counsel at Willkie Farr & Gallagher, is set to testify at the hearing on behalf of the Digital Dollar Project.
“The Digital Dollar Project believes that well-architected, durable and universal US CBDC, with trusted privacy protections, may well be in the national interest of the United States and, we believe, in the interest of the world economy,” Giancarlo said in his written testimony.
However, Giancarlo noted that “crafting [a US CBDC] will be an enormous and complicated undertaking.”
Lev Menand, an academic fellow and lecturer in law at Columbia Law School, said in written testimony before the hearing that a CBDC could “bring millions of people into the mainstream financial system.” He also said it can accelerate payments, among other benefits.
“It seems likely to me that a US digital dollar will ultimately be deployed. A major effort to get the design right should begin now,” Dr. Darrell Duffie, the Adams Distinguished Professor of Management and Professor Of Finance at the Stanford University Graduate School of Business, said in his written testimony.
As PYMNTS previously reported, the Federal Reserve said its Boston bank is working with MIT to look into the potentiality of issuing digital currency.
Jim Cunha, senior vice president, secure payments and FinTech at the Federal Reserve Bank of Boston, told PYMNTS that the joint efforts between the Fed and MIT are concentrated on exploring the infrastructure that would support a CBDC — and, at the same time, look into different use cases.