ABA Statement for the Record to the House Financial Services Committee on the Digital Payments Ecosystem

The American Bankers Association (ABA) appreciates the opportunity to provide a Statement for the Record for this hearing, Navigating the Digital Payments Ecosystem: Examining a Federal Framework for Payment Stablecoins and Consequences of a U.S. Central Bank Digital Currency. ABA is the voice of the nation's $24.1 trillion banking industry, which is composed of small, regional and large banks that together employ more than 2.1 million people, safeguard $19.2 trillion in deposits and extend $12.7 trillion in loans.

Stablecoin is an area of particular interest to our members, given the token's similarity in use to commercial bank money. We applaud the Committee's efforts to establish a regulatory framework for payment stablecoin. A regulatory framework that balances the potential for improving a customer's payment experience with the need to limit negative economic consequences, as well as financial stability and consumer protection risks, has potential to spur innovation, and the banking industry is ready to participate. We appreciate that the bill codifies the repeal of SAB 121, offers a path for banks to issue payment stablecoins, and acknowledges the authority of banking institutions to issue digital assets that represent deposits (i.e., tokenized deposits), otherwise use distributed ledgers for recordkeeping, and provide custodial services for payment stablecoins and their reserves. Banks are responsibly innovating in these areas and subject to a robust regulatory framework that ensures the safety and soundness of their operations.

ABA remains strongly opposed to a consumer-facing or retail central bank digital currency (CBDC), which would set the Federal Reserve up as a direct competitor for bank deposits and limit banks' ability to make the loans that power economic growth. It's worth noting that the deposit substitution risk we identified relative to CBDC is also a risk as we think about the impact of a scaled payment stablecoin market.

Download the statement for the record to read the full text.