Former CIA Analyst Comments CBDC ‘Race’
Yaya Fanusie, a cryptocurrency researcher and policy head at the Crypto Council for Innovation, explained in a recent Bloomberg interview that if the US government continues to lag behind in CBDC adoption, it risks losing its grip on the global financial system, which could have unforeseen geopolitical implications over time.
Sanctioned states are looking for financial infrastructure not controlled or heavily influenced by the United States to move funds more freely cross-borders. Suppose state-issued CBDCs become part of the globally adopted financial infrastructure, and the US has little influence over these new standards. In that case, it could impact US economic statecraft.
Fanusie also noted that China’s near-first mover advantage in exploring CBDCs since 2014 has given it an edge in the race to adopt digital currencies. The country launched the pilot version of its digital yuan on January 4, 2022, and has reportedly processed millions of transactions across millions of wallets. Fanusie added that there is an “array of pilots” testing out smart contracts to add programmability to CBDCs. China is helping other countries adopt similar standards.
While Fanusie believes that the country’s central bank digital currency push may cause geopolitical headaches for the US, he doesn’t think it will replace the US dollar. The United States’s sanctions power comes from the centrality of the US to the global financial infrastructure. If there is a viable new rail where sanctioned actors can now transact without being heavily influenced by the US, that could pose a problem.
Although the US Federal Reserve has made progress on its CBDC project, it has yet to receive approval from the US government. In January, the Fed released the latest version of its white paper on the digital dollar project, which outlines its potential benefits, risks, and design considerations.
Today we are proud to release DDP's 2023 white paper update where we revisit our "champion model" proposed in 2020, provide recommendations to the US government and private sector and look ahead to the next stage in #CBDC developments @giancarloMKTS https://t.co/bX5u4zfqMc pic.twitter.com/si2joxbkq9
— The Digital Dollar Project (@Digital_Dollar_) January 18, 2023
While CBDCs run on state-controlled ledgers are reportedly more efficient and easier to use in some cases than decentralized public networks such as Bitcoin and Ethereum, opponents of these currencies believe that states are adopting them to maintain a degree of financial control over their citizens. Pro-crypto US Congressman Tom Emmer recently introduced the CBDC Anti-Surveillance State Act to protect the financial privacy of United States citizens from actions by the Federal Reserve.
Today, I introduced the CBDC Anti-Surveillance State Act to halt efforts of unelected bureaucrats in Washington, DC from stripping Americans of their right to financial privacy. 👇 pic.twitter.com/lONbHFZMk7
— Tom Emmer (@GOPMajorityWhip) February 22, 2023