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In July 2019, NYU Professor and economist Nouriel Roubini also touched on the existing speed of the Visa credit card system versus digital currency in a Bloomberg News interview. Roubini stated:
“…nobody, not even this blockchain conference, accepts Bitcoin for paying for conference fees cause you can do only five transactions per second with Bitcoin. With the Visa system you can do 25,000 transactions per second…Crypto’s nonsense. It’s a failure. Nobody’s using it for any transactions.”
One of the key concerns in Congress and at the Fed appears to be that another country, such as China, might get ahead of the U.S. in the development of their own Central Bank Digital Currency and endanger the U.S. dollar as the world’s reserve currency. At the House Financial Services Committee hearing on May 26, Fed Vice Chair Brainard testified as follows:
“The future evolution of international payments and capital flows will also influence considerations surrounding a potential U.S. CBDC. The dollar is the most widely used currency in international payments and investments, which benefits the United States by reducing transaction and borrowing costs for U.S. households, businesses, and government. In future states where other major foreign currencies are issued in CBDC form, it is prudent to consider how the potential absence or presence of a U.S. central bank digital dollar could affect the use of the dollar in global payments. For example, the People’s Bank of China has been piloting the digital yuan, and several other foreign central banks are issuing or considering issuing their own digital currencies. A U.S. CBDC may be one potential way to ensure that people around the world who use the dollar can continue to rely on the strength and safety of the U.S. currency to transact and conduct business in the digital financial system. More broadly, it is important for the United States to play a lead role in the development of standards governing international digital finance transactions involving CBDCs consistent with the norms of privacy, accessibility, interoperability, and security.”
The credit unions and banking groups’ joint letter addressed that issue as follows:
“…a CBDC does not appear to be necessary to support the role of the U.S. dollar internationally. While many countries have experimented with a CBDC, many have focused on a wholesale model, something not contemplated by the Federal Reserve’s discussion paper. In addition, many have pulled these experiments back as the costs of implementation have become apparent. The Federal Reserve notes that the dollar’s status as the global reserve currency is driven by 1) the strength and openness of our economy, 2) the depth of our financial markets, and 3) the trust in our institutions and rule of law.”
Wall Street On Parade has been skeptical of the invisible hand(s) behind this push for a Central Bank Digital Currency at the Fed – (the Fed being the perpetual provider of bailouts to Wall Street’s casino banks) – ever since a similar invisible hand pushed Saule Omarova forward as President Biden’s nominee to head the Office of the Comptroller of the Currency, the regulator of national banks (those that operate across state lines).
In October of last year, the Vanderbilt Law Review published a 69-page paper by Omarova in which she proposed not just a Central Bank Digital Currency but a hair-raising, radical restructuring of the Fed that would include the following:
(1) Move all commercial bank deposits from commercial banks to so-called FedAccounts at the Federal Reserve;
(2)Allow the Fed, in “extreme and rare circumstances, when the Fed is unable to control inflation by raising interest rates,” to confiscate deposits from these FedAccounts in order to tighten monetary policy;
(3) Allow the most Wall Street-conflicted regional Fed bank in the country, the New York Fed, when there are “rises in market value at rates suggestive of a bubble trend,” such as with technology stocks today, to “short these securities, thereby putting downward pressure on their prices”;
(4)Eliminate the Federal Deposit Insurance Corporation (FDIC) that insures bank deposits in the U.S. and that prevents panic runs on banks;
(5) Consolidate all bank regulatory functions at the OCC – which Omarova was nominated to head.
By early November, Omarova was facing even more controversy when it was revealed that she had called the very industry that she had been nominated to supervise the “quintessential a**hole industry” in a 2019 Canadian feature documentary. Omarova eventually withdrew her nomination after it became clear she did not have the votes to be confirmed.
You can read the joint letter from the credit union and banking groups here; Brainard’s testimony is available here.
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