The Clearing House Association, L.L.C. (TCH) submitted a statement for the record for the House Financial Services Committee’s hearing examining the potential risks and opportunities presented by the possible introduction of a central bank digital currency (“CBDC”) in the U.S. The statement addresses the risks and benefits of a CBDC, and identifies other, less risky, and more effective ways to achieve the various policy objectives that have been advanced by proponents of a U.S. CBDC. In particular, the statement notes that a CBDC is likely to reduce the aggregate amount of deposits in the banking system, exacerbate runs on financial firms, complicate the implementation of monetary policy, challenge consumer privacy and the achievement of anti-money-laundering and countering-the-financing-of-terrorism (“AML/CFT”) objectives, and introduce operational resilience and cybersecurity concerns. The statement, which examines a number of potential benefits that have been advanced in support of a CBDC (e.g., improving cross-border payments and facilitating financial inclusion), finds that in every instance there is an alternative means of realizing the purported benefit and of achieving the policy objective that does not expose the financial system and economy to the substantial risks of a CBDC. For these reasons, and in light of the fact that a CBDC would require significant private-sector investment and risk without the support of a clear business case, the statement concludes that the risks of a CBDC strongly outweigh any potential benefits, and a CBDC should not be introduced in the U.S.

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