SOON: I'll be live-tweeting today's @FSCDems / @FinancialCmte hearing on FedAccounts and digital tools for stimulus payments with @iamsandali. You know the drill, thread for @CoinDesk starts here in 45 minutes 👇 #CryptoInDC
I've written a lot of digital dollar articles huh
We're getting started. @RepStephenLynch is kicking things off, asking members to keep their video on at all times, and noting that Congress has already passed one set of stimulus payments for $1,200: "That was all with the intent to provide immediate relief."
"76 days later, some Americans are still waiting on their relief," @RepStephenLynch notes
Some 8.5 million households don't have bank accounts, according to the @FDICgov, says @RepStephenLynch
"FedAccounts, consumer accounts at the Federal Reserve, have the potential to provide free" access, says @RepStephenLynch says
.@RepTomEmmer says it's "ridiculous" (that they're having a virtual hearing) and that "we should be in Washington doing our job"
"The dollar is changing, and Americans deserve a full accounting" of the work being done, @RepTomEmmer says
"Electronic cash will be susceptible to illicit use just as the dollar is today ... I hope the conversation around the digital dollar today takes into account these essential freedoms Americans take for granted," @RepTomEmmer says
Quick who's who -- @RepStephenLynch is the chair of the task force; @RepTomEmmer is the ranking member on the task force; @PatrickMcHenry is the ranking member of the @FinancialCmte
People waited hours outside a single Keybank branch last week because it was the only bank that offered unemployement benefits, @MehrsaBaradaran says in her opening remarks
This isn't a new problem, @MehrsaBaradaran says. "Even in places where banks are plentiful, there are barriers" including high fees, lack of trust in banks, etc
People are "having to bike from Queens to Manhattan to avoid bank fees," @MehrsaBaradaran says
Banking services are only available to US banks and their customers. If you're outside of it, you're on your own, @MehrsaBaradaran says
.@MehrsaBaradaran is recommending banks work with the @USPS to provide broader banking services to people who need it
"We need to close this cash-digital divide first," @MehrsaBaradaran says, noting many people don't have mobile phones, etc
An Arizona town that lost its only bank saw business revenues drop significantly; "The post office is the unofficial bank," @MehrsaBaradaran said
The post office is America's most trusted institution, @MehrsaBaradaran says
.@giancarloMKTS is now up, starting with three observations: America's infrastructure is starting to age, "and the same is true of America's financial infrastructure." What was new is now showing age and limitations
His second observation is that digital ID, votes, etc are increasingly being stored online, @giancarloMKTS says
.@giancarloMKTS' third observation is unless the US acts, it'll fall behind
The #digitaldollar is more about just the current crisis, @giancarloMKTS says. "We must prepare to modernize the dollar from a simple analogue instrument to a unit of account ... we must future-proof the dollar today, for that digital tomorrow."
It will take time to get the #digitaldollar right, but now's the time to do it, @giancarloMKTS says
.@JodieLKelley is now up, representing the ETA, a trade org: "Ours is an industry that in North America alone moves $8.5 trillion a year in card and (p2p?) payments securely, reliably and quickly
The perspective I bring today is how we're using this technology now, @JodieLKelley says [paraphrased], referencing both unemployment benefits and electronic payments
Prepaid cards "are a simple and effective solution" that have long been used to distribute payments ie SNAP benefits, @JodieLKelley says
Funds on prepaid cards are FDIC insured and contain same protections that other types of cards have, @JodieLKelley says, including against fraud
Prepaid cards can be loaded onto mobile wallets, can be used with tap-to-pay, which "provides peace of mind," @JodieLKelley says
I think @JodieLKelley just said paypal/venmo have been used to distribute payments [will check]
.@MorganRicks1 is now up, discussing the FedAccount proposal (which he first? wrote about in 2018 I think)
FedAccounts would offer an array of transformative benefits, @MorganRicks1 says. Fed's #digitaldollar accounts are highly attractive, but are currently restricted to banks, govt entities and other large financial institutions
This means the Fed issues two types of money: paper dollars, open to most, and digital dollars, only open to specific parties, @MorganRicks1 says
FedAccounts would likely generate revenue, though it'd present issues on privacy, fraud protections, etc, @MorganRicks1 says
.@RepStephenLynch says he cut @giancarloMKTS off 45 seconds early, is letting the Digital Dollar Project director complete his opening remarks
"Throughout our history America has been a leader in innovation," @giancarloMKTS says -- US has brought core values to building internet, the space program, etc
"The choice is we take a leadership role or we let others take a leadership role" and they get to put in their own values, @giancarloMKTS says
Q&A time; @repStephenLynch is starting off. Says it's clear that millions of Americans are currently shut out of the banking system, which prevents them from getting aid
What are we talking about here in terms of getting something like FedAccounts up and running, @RepStephenLynch asks, specifically wrt timing
.@MehrsaBaradaran: "If we want FedAccounts at postal banks, we can do that. We have the technology." Would require ATMs, etc but she says it could be done "very quickly"
Our first "You might be muted"
"I think if you want, the Fed itself has been processing real-time instant payments for many many decades through the FedWire system," @MorganRicks1 says. "The Fed has been opening accounts on its own books since its inception ... retail operations are a different matter"
Fed could contract with the private sector to offer the services while it builds out its own infrastructure, but FedAccounts could happen "very very quickly," @MorganRicks1 says
Turning to @ElecTranAssoc's @JodieLKelley, @RepStephenLynch asks how to get Venmo/PayPal services to the portion of Americans not currently using those tools
.@JodieLKelley says 80% of Americans have smartphones (ie 20% don't), and there is a preference among some to use debit cards instead
.@RepTomEmmer is now up, starts his question time by reiterating his view that the hearing should be happening IRL in DC
"Would the federal government have the technical ability to deny access or shut down the account of someone not following the law?" asks @RepTomEmmer of the Digital Dollar Project's white paper
"No," says @giancarloMKTS, citing privacy rights etc
.@giancarloMKTS says he believes a digital dollar could be attractive on a global basis, referring to protections or use of personal data
More on #digitaldollar thoughts here:
And here:
In the short-term, leveraging existing programs is the way to go since we know that they work, @JodieLKelley says, "but we agree industry should work in partnership with the government ... to position for the future"
.@repdavidscott is now up, says he is concerned "about our inability so far to be able to address what I think is a very pressing issue, and that is the lack of financial education, particularly of our younger new generation"
"I'm aware of how rapidly we are moving to a cashless society, and doing this without any regard 'how do we bring our American people along with us, how do we bring our younger generation?'" @repdavidscott says
Only 17 states have a school system that offer at least one course on financial literacy, @repdavidscott says
"65% of African Americans conduct their financial transactions in cash," says @repdavidscott. "When you put that together ... we need to begin to draw our attention to it and make sure we're bringing our full nation along with us as we move at what is warp speed with this tech"
.@repdavidscott asks @JodieLKelley what she attributes the improvement in getting stimulus payments out (10 wks in 2008 vs 2 wks in 2020?)
It's equally true that we're not moving quickly enough, @JodieLKelley says. "Different things that we are doing this time, increasing use of prepaid, increasing use of P2P" can be leveraged better
.@repdavidscott asks about addressing scams and frauds. @giancarloMKTS says the @CFTC has a very strong enforcement program; adds it's important that regulatory agencies stay ahead of the technology to stay ahead of the scammers
.@PatrickMcHenry starts off asking @giancarloMKTS to explain why the #digitaldollar is such an important tool; "what does a digital dollar have to do with financial inclusion and government subsidies?"
"We have populations that are underbanked and unbanked," @giancarloMKTS says. Some young people haven't gotten mortgages, etc yet, but are fascinated by smartphones. Digital dollar could be a tool to reach them [paraphrased]
We have many folks who live in rural America, who live in banking deserts, @PatrickMcHenry notes. "If you travel across the country you recognize this ... how would the digital dollar help these folks?"
The big issue for many of these folks is broadband access, @giancarloMKTS says. During his time at @CFTC he says farmers were looking up prices for products in Chicago etc
Would that access issue be a barrier to accessing the digital dollar? asks @PatrickMcHenry
"I think it would be a direct on-ramp," @giancarloMKTS says. "There are populations that Mr. Scott mentioned with folks that are just outside the banking system but are comfortable with bearer instruments"
"It's about values. China's going to do what China's going to do, and they see this as an opening ... their currency is not a global reserve currency so they have an opportunity here," @giancarloMKTS says in response to another q by @PatrickMcHenry
.@RepBenMcAdams asks @JodieLKelley how we can improve benefits delivery?
There is a real need for govt and industry to come together and identify what it is they're trying to accomplish, find gaps, and look for existing tools to find those gaps, @JodieLKelley says
We talked about the fraud that inevitably comes up ... an added benefit of these debit cards is they protect consumers against fraud, @JodieLKelley says
.@MehrsaBaradaran says she wants to underscore @JodieLKelley in talking about using the tools that already exist; "we can discuss a blockchain-based system but the problem here is the banking deserts ... we have the technology to meet that"
.@RepFrenchHill asks @giancarloMKTS to clarify that he's not proposing a centralized digital dollar
.@giancarloMKTS says it would be distributed by the Fed like the dollar is today
.@RepFrenchHill queues up a question about @davidmarcus's statements on using a digital dollar last year but ran out of time before he could ask the question itself
.@WarrenDavidson asks for consent to enter a letter written by himself and several colleagues about using blockchain in response to the current crisis (entered without objection I think?)
"I am concerned that our laws, or our lack of laws ... will hamper the innovation that needs to take place," @WarrenDavidson says in the lead up to discussing the Token Taxonomy Act he introduced last year
It's for the marketplace to determine which innovations are adopted, @giancarloMKTS says
.@RepBryanSteil is now up, starts with "How do we get more people banked, how do we increase our financial inclusion in the services space?"
Where can we look besides these regulatory institutions, asks @RepBryanSteil to @giancarloMKTS
We do need to take steps [toward financial inclusion] says @giancarloMKTS
.@RepBryanSteil says removing some of the barriers/regs in the financial sector could help make it easier for the unbanked(? I believe); switches gears and asks about China's forthcoming CBDC
.@FSCDems Chair @RepMaxineWaters is now up: "What are we going to do about the unbanked? ... 35 million people have received paper checks" but her concern is that those who haven't might need it most
.@RepMaxineWaters says she's drafted a bill on providing banking services; asks for feedback
FedAccounts could offer a compelling way of dealing with the problem of the unbanked, which has been on the public policy agenda for decades, @MorganRicks1 says
.@RepRashida says that while some folks don't know which services are available, the lack of broadband access is more significant; references her bill from April in issuing payments coindesk.com/digital-dollar…
.@RepRashida asks @MehrsaBaradaran about postal banks; the Professor says postal banks can work with the Fed: "The technology is already there"
"If we want to follow other countries' leads, we could, but are also a leader ... the post office is trusted, it's secure," @MehrsaBaradaran says
Some have still not received stimulus payments, @RepRashida says. "Would the technology described in the [BOOST] Act be able to address the issue around some of these problems you see with paper checks?"
There are lots of interesting proposals out there that are worthy of discussion, @JodieLKelley says. "As we sit here today ... what is clear is we're going to have to harness the infrastructure that is here today."
There is no broadband issue with prepaid cards, @JodieLKelley says
That's the end of the questioning; @RepStephenLynch enters a number of questions to the record. The hearing is adjourned
@threadreaderapp hi plz unroll
