Scott Bessant, incoming President Donald Trump’s selection to become the Secretary of the Treasury, is not supportive of a CBDC or central bank digital currency.
A graduate of Yale, Bessent is a hedge fund manager who worked for George Soros at one time, but today, he operates his own firm, Key Square Group.
Digital currency issued by a central bank is a hot topic in the Fintech space and is currently being reviewed by the US Federal Reserve. In theory, digital currency can lead to efficiencies within financial services, but the concept has also raised significant privacy concerns.
Multiple jurisdictions are researching a digital currency, and China has been testing one in the public. The UK just provided an update on their progress. But while a government may promise never to abuse information gleaned from a CBDC, it may be too tempting for public authorities at some point in the future, causing concern from many industry insiders.
Asked by a Senator at his confirmation hearing at the Senate Finance Committee today about issuing a CBDC, Bessant said he sees no reason for the US to have a digital dollar.
“In my mind, a central bank digital currency is for countries who have no other investment alternatives,” said Bessent. He believes many countries are pursuing a CBDC out of necessity, as other currencies do not have the same security and intrinsic value as the dollar, which remains the world’s reserve currency. If you hold dollars, you can easily park the money in nearly risk-free assets that generate a return.
While Bessent did not get a chance to expound further, he pleased Republicans that are against retail CBDCs.
Other questions by both both parties were effectively answered and countered by Bessent, thus paving the way to his approval as the next Secretary of the Treasury.
