    [House Hearing, 116 Congress]
    [From the U.S. Government Publishing Office]

                      INCLUSIVE BANKING DURING A PANDEMIC:

                     USING FEDACCOUNTS AND DIGITAL TOOLS TO

                     IMPROVE DELIVERY OF STIMULUS PAYMENTS

    =======================================================================

                                    HEARING

                                   BEFORE THE

                       TASK FORCE ON FINANCIAL TECHNOLOGY

                                     OF THE

                        COMMITTEE ON FINANCIAL SERVICES

                         U.S. HOUSE OF REPRESENTATIVES

                         ONE HUNDRED SIXTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                 JUNE 11, 2020

                                   __________

           Printed for the use of the Committee on Financial Services

                               Serial No. 116-95

     [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                               ______

                  U.S. GOVERNMENT PUBLISHING OFFICE
    42-895 PDF             WASHINGTON : 2021

                     HOUSE COMMITTEE ON FINANCIAL SERVICES

                     MAXINE WATERS, California, Chairwoman

    CAROLYN B. MALONEY, New York         PATRICK McHENRY, North Carolina,
    NYDIA M. VELAZQUEZ, New York             Ranking Member
    BRAD SHERMAN, California             ANN WAGNER, Missouri
    GREGORY W. MEEKS, New York           FRANK D. LUCAS, Oklahoma
    WM. LACY CLAY, Missouri              BILL POSEY, Florida
    DAVID SCOTT, Georgia                 BLAINE LUETKEMEYER, Missouri
    AL GREEN, Texas                      BILL HUIZENGA, Michigan
    EMANUEL CLEAVER, Missouri            STEVE STIVERS, Ohio
    ED PERLMUTTER, Colorado              ANDY BARR, Kentucky
    JIM A. HIMES, Connecticut            SCOTT TIPTON, Colorado
    BILL FOSTER, Illinois                ROGER WILLIAMS, Texas
    JOYCE BEATTY, Ohio                   FRENCH HILL, Arkansas
    DENNY HECK, Washington               TOM EMMER, Minnesota
    JUAN VARGAS, California              LEE M. ZELDIN, New York
    JOSH GOTTHEIMER, New Jersey          BARRY LOUDERMILK, Georgia
    VICENTE GONZALEZ, Texas              ALEXANDER X. MOONEY, West Virginia
    AL LAWSON, Florida                   WARREN DAVIDSON, Ohio
    MICHAEL SAN NICOLAS, Guam            TED BUDD, North Carolina
    RASHIDA TLAIB, Michigan              DAVID KUSTOFF, Tennessee
    KATIE PORTER, California             TREY HOLLINGSWORTH, Indiana
    CINDY AXNE, Iowa                     ANTHONY GONZALEZ, Ohio
    SEAN CASTEN, Illinois                JOHN ROSE, Tennessee
    AYANNA PRESSLEY, Massachusetts       BRYAN STEIL, Wisconsin
    BEN McADAMS, Utah                    LANCE GOODEN, Texas
    ALEXANDRIA OCASIO-CORTEZ, New York   DENVER RIGGLEMAN, Virginia
    JENNIFER WEXTON, Virginia            WILLIAM TIMMONS, South Carolina
    STEPHEN F. LYNCH, Massachusetts      VAN TAYLOR, Texas
    TULSI GABBARD, Hawaii
    ALMA ADAMS, North Carolina
    MADELEINE DEAN, Pennsylvania
    JESUS ``CHUY'' GARCIA, Illinois
    SYLVIA GARCIA, Texas
    DEAN PHILLIPS, Minnesota

                       Charla Ouertatani, Staff Director
                       TASK FORCE ON FINANCIAL TECHNOLOGY

                   STEPHEN F. LYNCH, Massachusetts, Chairman

    DAVID SCOTT, Georgia                 TOM EMMER, Minnesota, Ranking
    JOSH GOTTHEIMER, New Jersey              Member
    AL LAWSON, Florida                   BLAINE LUETKEMEYER, Missouri
    CINDY AXNE, Iowa                     FRENCH HILL, Arkansas
    BEN McADAMS, Utah                    WARREN DAVIDSON, Ohio
    JENNIFER WEXTON, Virginia            BRYAN STEIL, Wisconsin
    RASHIDA TLAIB, Michigan

                                C O N T E N T S

                                  ----------
                                                                       Page
    Hearing held on:
        June 11, 2020................................................     1
    Appendix:
        June 11, 2020................................................    29

                                   WITNESSES
                            Thursday, June 11, 2020

    Baradaran, Mehrsa, Professor of Law, University of California
      Irvine School of Law...........................................     5
    Giancarlo, Hon. J. Christopher, Senior Counsel, Willkie Farr &
      Gallagher, and former Chairman, U.S. Commodity Futures Trading
      Commission.....................................................     7
    Kelley, Jodie, CEO, Electronic Transactions Association (ETA)....     9
    Ricks, Morgan, Professor of Law, Vanderbilt University Law School    10

                                    APPENDIX

    Prepared statements:
        Baradaran, Mehrsa............................................    30
        Giancarlo, Hon. J. Christopher...............................    39
        Kelley, Jodie................................................    99
        Ricks, Morgan................................................   114

                  Additional Material Submitted for the Record

    Lynch, Hon. Stephen F.:
        Written statement of the American Bankers Association........   124
        Written statement of Cornell University Law School...........   133
        Written statement of the Credit Union National Association...   135
        Written statement of eCurrency...............................   137
        Written statement of the Innovative Payments Association.....   142
        Written statement of Isaiah Jackson, author of ``Bitcoin and
          Black America''............................................   161
        Written statement of Mobility Capital Finance Inc............   163
    Emmer, Hon. Tom:
        Letter to Treasury Secretary Steven T. Mnuchin...............   168
        Written statement of Cardtronics and Coinstar................   170
        Written statement of Tony Yezer..............................   173

                           INCLUSIVE BANKING DURING A

                          PANDEMIC: USING FEDACCOUNTS

                          AND DIGITAL TOOLS TO IMPROVE

                        DELIVERY OF STIMULUS PAYMENTS

                                  ----------

                            Thursday, June 11, 2020

                 U.S. House of Representatives,
                    Task Force on Financial Technology,
                               Committee on Financial Services,
                                                       Washington, D.C.
        The task force met, pursuant to notice, at 12 p.m., via
    Webex, Hon. Stephen F. Lynch [chairman of the task force]
    presiding.
        Members present: Representatives Lynch, Scott, Lawson,
    Axne, McAdams, Wexton, Tlaib; Emmer, Hill, Davidson, and Steil.
        Ex officio present: Representatives Waters and McHenry.
        Chairman Lynch. The Task Force on Financial Technology will
    now come to order.
        Without objection, the Chair is authorized to declare a
    recess of the task force at any time. Also, without objection,
    members of the full Financial Services Committee who are not
    members of the task force are authorized to participate in
    today's hearing.
        Members are reminded to keep their video function on at all
    times, even when they are not being recognized by the Chair.
    Members are also reminded that they are responsible for muting
    and unmuting themselves, and to mute themselves after they are
    finished speaking. That would be helpful.
        Consistent with the regulations accompanying House
    Resolution 965, staff will only mute Members and witnesses as
    appropriate when not being recognized by the Chair, and for the
    purpose of preventing inadvertent background noise. Members are
    reminded that all House Rules relating to order and decorum
    apply to this remote hearing.
        Today's hearing is entitled, ``Inclusive Banking During a
    Pandemic: Using FedAccounts and Digital Tools to Improve
    Delivery of Stimulus Payments.''
        I now recognize myself for 4 minutes for an opening
    statement.
        Over the past several months, the coronavirus has spread
    devastation across our country. It has killed more than 110,000
    Americans, it has robbed millions more of their jobs, and it
    has left Americans wondering how they will pay for even the
    most basic necessities such as rent and food.
        In response to this crisis, Congress passed the Coronavirus
    Aid, Relief, and Economic Security (CARES) Act. Among its many
    provisions, we included economic impact payments: $1,200 for
    every adult making less than $75,000 a year, with $500 per
    parent and child. That was all with the intent to provide
    immediate relief to those most in need of it.
        The CARES Act was passed into law on March 27th. Today is
    June 11th: 76 days later, some Americans are still waiting on
    their so-called immediate relief. Many of those people who
    needed the help the most were the last to receive it. Although
    the IRS and Treasury acted quickly to distribute payments to
    Americans, they ran into problems. Some of those problems were
    foreseeable; they exist due to long-standing inequities and
    deficiencies in our banking system.
        We on this committee, and on the task force, have spent
    considerable time in this recent session searching for ways to
    improve financial inclusion. But the simple truth is that
    millions of Americans still lack access to the traditional
    banking system. The FDIC has said that nearly 8.5 million
    households don't have a bank account, often because bank
    accounts are too expensive.
        Americans without bank accounts receive their economic
    impact payments much, much later than those with bank accounts
    and direct deposit. And to make matters worse, many of those
    without bank accounts have had to pay check-cashing fees,
    exorbitant fees, once they did receive their checks.
        A family struggling to make ends meet, while not having
    access to bank accounts, is difficult enough in normal times.
    In times like these, it can be the difference between a
    refrigerator full of groceries and going to bed hungry. With
    all of our resources in this country, no family should have to
    experience hunger simply because they don't have a bank
    account.
        So today, we will hear testimony on ways to improve the
    delivery of direct benefit payments to Americans. FedAccounts,
    consumer accounts at the Federal Reserve, have the potential to
    provide free access to bank accounts for the millions of
    Americans currently without one, giving them immediate access
    to Federal benefits.
        Further, we will explore the ways in which new technology
    that many of us now use every day, such as the digital wallets
    on our phones, can improve inclusion and efficiency in programs
    like this.
        This conversation is timely and necessary. The House passed
    another set of economic impact payments in the Health and
    Economic Recovery Omnibus Emergency Solutions (Heroes) Act, to
    continue providing this important relief to Americans. We must
    learn from the immediate past and the mistakes we have recently
    made to ensure that every American gets the access they need
    and deserve.
        And I look forward to today's discussion.
        I would now like to recognize the ranking member of the
    task force, my friend from Minnesota, Mr. Emmer, for 4 minutes
    to give his opening statement.
        Thank you.
        Mr. Emmer, I think you are muted. If you would look at that
    row of icons just above the picture frame--
        Mr. Emmer. It is the Financial Services Committee's Task
    Force, and I warned Petrina when this started--you would think
    we would be better with the technology, but here we go.
        So, you missed all the wonderful things I said about you,
    Mr. Chairman. I want to thank you, my colleague from
    Massachusetts, for moving this task force ahead, and making
    sure it continues to meet. I appreciate you, and I appreciate
    all of your staff who are making these things happen, but just
    for the record, I want it be known that I think this is
    outrageous, ridiculous, and totally unnecessary. I think we
    should be in Washington doing our job, and I hope that people
    will see that soon.
        The conversation today stands to be very insightful on two
    topics: the ways the Federal Government can better utilize
    technology to increase efficiency in delivery of government
    services; and the concept of a centrally-backed digital
    currency. I appreciate and look forward to our witnesses'
    thoughts on these subjects.
        Two months ago, I wrote a letter, along with my colleague,
    Darren Soto, urging Treasury to take additional steps to
    leverage everything that American ingenuity, entrepreneurship,
    and innovation has to offer. As co-Chairs of the Blockchain
    Caucus, we have been diving deep on all of the technology and
    what it has to offer. It could help to serve both topics of
    this hearing that I mentioned previously.
        In addition, a wide array of technologies could help the
    Treasury distribute the remaining stimulus payments that have
    not been distributed yet, and I urge them, and each agency, to
    consider new technologies that could help the agencies operate
    more efficiently and more quickly.
        I want to turn now to the second topic, and what I think
    could stand to serve as the sole topic of a hearing like this:
    a centrally-backed digital currency. Representative Hill, who
    now serves as ranking member of our Subcommittee on National
    Security, International Development and Monetary Policy,
    highlighted this topic many months ago to the Federal Reserve,
    and did it in a bipartisan fashion. Since then, I have heard
    that the Fed has been working to research and develop the
    concept, a process which I emphatically support, but
    unfortunately they have not received the level of public
    consideration and transparency that I think is fundamentally
    necessary for such a pursuit.
        The dollar is changing, and Americans deserve a full
    accounting of the work being done and the considerations they
    will have to make in ensuring that their leaders continue to
    guarantee their freedom and their methods of exchange. In fact,
    cash is a public payments infrastructure available to all
    citizens without any need for permission. Currently, cash works
    solely by the bearer of the instrument. As the economy moves
    increasingly online, the use of cash will diminish.
        To engage in electronic commerce, citizens need an
    intermediary in most cases, including many cryptocurrencies. To
    be a truly permissionless digital cash however, a digital
    dollar must have the same attributes as physical cash. Anything
    less would simply create a new intermediate, and it could even
    be one offered by the government in competition with private
    financial institutions.
        It is American values like freedom, privacy, openness, and
    permissionless entrepreneurship that have led us to dominate
    global commerce and innovation. We should have the courage of
    our convictions to build these values into a digital dollar,
    and not to emulate systems like China's new digital wand, which
    is closed, centralized, surveilled, and permissioned so that
    access can be denied and payments blocked by those in power.
        Electronic cash will be as susceptible to illicit use as
    the dollar is today. The same rules that apply to physical cash
    that should apply to a digital dollar. While this may not go
    far enough for some, the only way to go further would be to
    create a permission closed and surveilled system like China's.
        I hope the conversation surrounding the digital dollar
    today takes into account these essential freedoms that
    Americans may often take for granted, but must also ensure to
    continue on as we move into this new era. As I have said from
    the beginning, technologies like this can empower individuals
    and make their government more accountable directly to them. We
    can't cede this power to the government at the expense of the
    individual.
        With that in mind, I appreciate the witnesses' time. Mr.
    Chairman, I yield back.
        Chairman Lynch. The gentleman yields back.
        The Chair now recognizes the gentlewoman from California,
    the Chair of the full Financial Services Committee, Chairwoman
    Waters.
        Okay. We are going to wait for Chairwoman Waters.
        I now recognize the ranking member of the Full Committee,
    the gentleman from North Carolina, Mr. McHenry, for 1 minute.
        Mr. McHenry. Thank you, Mr. Chairman, and thank you, Mr.
    Ranking Member. Thanks for holding this hearing. And I want to
    thank our witnesses for being available to us digitally.
        I think when we look back at this period of time, it will
    be viewed as a great accelerator, especially when it comes to
    technology enhancing and quickening technological trends
    across-the-board. What I mean by that is it has forced us to
    adopt a new way of living right now that only a few months ago
    seemed years away.
        Think about, for example, a remote work force. That was
    commonly viewed as an option for some, but now it is a default
    for all of us--or most of us.
        Banking is undergoing a fundamental change as well. To meet
    these challenges, we have to change our mindset about how we
    build for tomorrow. We need to explore advanced digital tools
    to make banking easier, safer, and especially, more inclusive.
        So, thank you for the hearing today. Thanks for the
    engagement, and I look forward to the questions.
        Chairman Lynch. Thank you. The gentleman yields back.
        The Chair now recognizes the gentleman from Georgia, Mr.
    Scott, for 1 minute.
        Mr. Scott. Thank you, Chairman Lynch.
        And let me just echo everything that has been said. We have
    this new and exciting technology to use to be able to sustain
    our American consumers.
        As you will recall, in the 2008 dilemma that we had, our
    crisis, it took an extraordinarily long time to even get the
    help down to our constituents. This time, we did it a little
    quicker with this pandemic, but not quickly enough.
        I look forward to our great panel of witnesses who will be
    providing information in terms of how we can really take this
    exciting technology and bring it home and deliver better
    reception to our American people.
        Thank you, Mr. Chairman.
        Chairman Lynch. I thank the gentleman.
        Today, we welcome the testimony of an esteemed panel of
    experts.
        First, Mehrsa Baradaran, a professor of law at the
    University of California, Irvine. Professor Baradaran has
    written extensively about financial inclusion and inequality,
    including the books, ``How the Other Half Banks: Exclusion,
    Exploitation, and the Threat to Democracy,'' and ``The Color of
    Money: Black Banks and the Racial Wealth Gap.'' We want to
    welcome you, professor.
        Second, the Honorable Chris Giancarlo, senior counsel at
    Willkie Farr & Gallagher, and the former Chairman of the U.S.
    Commodity Futures Trading Commission. Mr. Giancarlo also leads
    the Digital Dollar Foundation, which is dedicated to exploring
    options for a central bank digital currency. Welcome.
        Third, Jodie Kelley, the CEO of the Electronic Transactions
    Association, which represents over 500 companies in the
    electronic transactions space. Ms. Kelley also previously
    served as Vice President and Deputy General Counsel of Fannie
    Mae. Welcome.
        Fourth, Morgan Ricks, professor of law at Vanderbilt
    University. Professor Ricks has worked extensively on financial
    reform, including the FedAccounts proposal, and from 2009 to
    2010, was a senior advisor at the Treasury Department. Welcome
    to you, also.
        Our witnesses are reminded that your oral testimony will be
    limited to 5 minutes. A chime will actually go off at the end
    of your time, and I ask that you respect the members' and other
    witnesses' time by wrapping up your oral testimony. And without
    objection, your prepared statements will be made a part of the
    record.
        Professor Baradaran, you are now recognized for 5 minutes
    to give an oral presentation of your written testimony.

    STATEMENT OF MEHRSA BARADARAN, PROFESSOR OF LAW, UNIVERSITY OF
                    CALIFORNIA IRVINE SCHOOL OF LAW

        Ms. Baradaran. Thank you.
        Chairman Lynch, Ranking Member Emmer, and members of the
    Task Force on Financial Technology, thank you for calling this
    important hearing on this critical issue.
        Last week, hundreds of people waited for hours in a single-
    file line for an ATM at a New York City branch of KeyBank, the
    only bank branch offering unemployment benefits without fees.
    The New York Times reported that every day from dawn till dusk,
    since the beginning of the crisis, there has been a long line.
    The New York Post reported that the crowd, mostly made up of
    people of color, had come from the five burroughs amidst a
    pandemic, and rolled the dice on their health, just to avoid
    getting gouged with surcharges at out-of-network banks.
        Mr. Quan, a former Food Network ``Chopped'' champion, who
    is now out of work, said he biked from Chinatown to save $3,
    which can sometimes mean a meal eaten or not.
        Mr. Flores, a 45-year-old, out-of-work line cook from
    Queens, waited nearly 3 hours before getting to the teller. He
    said, ``I feel tired, but I need the money.'' Mr. Flores, who
    has a wife and 2 children, withdrew $500. He pays his $1,500-a-
    month rent in Astoria in installments to his landlord because
    he has to make sure his family has enough to eat.
        Ms. DeLeon, after about 3 hours in line, finally withdrew
    $1,000, but she needed the full $1,500. She said, ``My feet
    hurt, my back hurts,'' but she has to go back in line the next
    day.
        These problems are not new. In fact, I have been shouting
    into the void of academic research for a decade about how our
    banking system leaves out some of our most vulnerable
    communities--Black communities, Brown communities, low-income
    communities, and rural communities.
        Believe it or not, the problem has gotten even worse since
    I began researching these issues. Over the last 10 years, as
    banks have become bigger and more profitable, over 93 percent
    of bank closings were in low- to middle-income (LMI)
    communities. Rural America has lost 50 percent of its banks.
        With the Fed's recent approval of the SunTrust-BB&T merger,
    an estimated 700 more branches will likely be closing soon,
    mostly in the south and the southeast, and many of these areas
    will be lower-income areas.
        Even in places where the banks are plentiful, like New York
    City, there are barriers: high fees, which are primarily paid
    by low-income people; slow payment processing; and the lack of
    trust in banks. Those who are unbanked or underbanked, which is
    up to 25 percent of the population, spent time and money in
    line to pick up their checks, and then in another line to pay
    their bills in cash to the electricity office, the water
    office, and the landlord, and in line to purchase money orders
    so they can mail their bills on time, and on and on and on.
        Those of us with enough of a financial cushion, who put our
    bills on autopay and easily switch between syntax apps and
    credit cards, might need some financial education to understand
    the difficulties faced by our fellow Americans, like having to
    bike from Queens to Manhattan to avoid bank fees just to use
    our money. This crisis will push many more families onto this
    thin ice.
        The simple problem is this: The U.S. payment system is only
    available to banks and their customers. If you are outside of
    it, you pay a toll. I urge Congress to open up these tracks on
    which our nation's commerce runs. To everybody, Congress need
    not reinvent the wheel. Congress already created a public
    system, the Federal Reserve. The Fed's explicit charter is to
    serve the public interest and to increase the integrity,
    efficiency, and equity of the U.S. payment system. That was a
    mandate that Congress gave.
        I urge Congress to ensure equal access to this important
    public utility. I believe the most effective way to do this is
    through a partnership between the Fed and the postal offices of
    this country. On the back end, these deposits would be handled
    by the States and secure Central Bank as my colleague, Morgan
    Ricks, will explain.
        On the consumer side, you could go to the local post
    office, deposit your money, and take cash out of the ATM
    without fees. You could set up automatic bill pay through
    online or mobile banking, get a debit card, and use it for
    online shopping, et cetera.
        FedAccounts, digital wallets, all of those are essential
    and will be great, but we need to close this cash digital
    divide first. Between 20 to 40 million Americans don't have
    broadband. A lot of the elderly are not comfortable with mobile
    payments or don't have mobile phones.
        To illustrate the point, I have another story that happened
    in Duncan, Arizona, when they lost their only bank. The nearest
    bank was 40 miles away. Business revenue shrank by 20 percent
    when they lost their bank. American Banker journalist, Kevin
    Wack, went to the town and began talking to residents. One
    hotel owner said that she just walks over to the post office,
    buys a single stamp, and requests cash back, which is cheaper
    than patronizing any of the town's ATMs.
        An electricity cooperative in town uses the post office for
    their business accounts rather than keeping currency on hand or
    driving far away. Thankfully, he says, the post office is the
    unofficial bank.
        Another resident said, ``It has made me think, why
    shouldn't the post office start to fill the role of small banks
    in these towns?''
        The last thing I will say, and then I will close, is that
    the post office is America's most trusted institution,
    according to a new marketing firm, and it was designed that way
    by our first President, George Washington, in 1792. For over
    200 years, the USPS has maintained its public-serving mission
    by offering equitable services to all.
        Thank you.
        [The prepared statement of Professor Baradaran can be found
    on page 30 of the appendix.]
        Chairman Lynch. Thank you.
        Mr. Giancarlo, you are now recognized for 5 minutes.

      STATEMENT OF THE HONORABLE J. CHRISTOPHER GIANCARLO, SENIOR
     COUNSEL, WILLKIE FARR & GALLAGHER, AND FORMER CHAIRMAN, U.S.
                  COMMODITY FUTURES TRADING COMMISSION

        Mr. Giancarlo. Thank you, Chairman Lynch and Ranking Member
    Emmer, and also, thanks to Chairwoman Waters and Ranking Member
    McHenry.
        I would like to begin with three observations from my time
    in public service.
        First, much of America's physical infrastructure, its
    bridges, tunnels or airports that were once state-of-the-art in
    the last century, as we have all seen, have been allowed to
    age, deteriorate, and become obsolete in this century.
        Well, the same is true about some of our financial
    infrastructure. Methods of payment and settlement, shareholder
    and proxy voting, and investor access to disclosure that were
    once state-of-the art in the 20th Century are showing age and
    limitations in this new 2lst Century. Nothing reveals the
    limits of our accounts-based financial system more starkly than
    the current COVID-19 pandemic, when tens of millions of
    Americans are waiting a month or more to receive these payments
    by paper check.
        My second observation is that we are certainly entering a
    new era when things to value, like money and agricultural and
    mineral commodities, CompTraks, stock certificates and land
    records, and cultural assets like art and music and votes, and
    even personal identities, will be stored, managed, and moved
    around in a secure way from person to person without central
    validators. It is done by collective cartography and a
    decentralized network of computational algorithms.
        And my third observation is that unless we act, this coming
    wave of innovation will put enormous strain on our aged
    financial systems.
        This task force is reviewing several ideas for digital
    dollar electronic cash payments. They look at digital dollars
    in terms of benefits distribution and financial inclusion for
    existing account-based systems.
        Today, I would like to discuss with you a far more
    fundamental digital dollar proposed recently by the Digital
    Dollar Project. It is a U.S. central bank digital currency, or
    CBDC, as it is known. This type of digital dollar would be a
    new additional form of money. It would be a digital bearer
    instrument with the same legal status as the dollars in one's
    purse, but on a mobile device. It would operate alongside
    existing forms of money distributed through the existing two-
    tier banking system open to new entrants and potentially
    recorded by distributed ledger technology.
        This type of CBDC would increase financial inclusion by
    broadening access to services through digital wallets on
    smartphones, and would enable the sending of COVID relief
    immediately to the electronic wallets of underbanked
    populations and expand their ability to access financial
    services and to use e-commerce platforms that do not accept
    physical cash.
        Yet, this type of digital dollar is about more than
    financial inclusion in a crisis. Today, most of the world's
    tradeable commodities and contracts are priced in U.S. dollars.
    Tomorrow, they will be digitized, tokenized, and coupled with
    algorithmically-driven smart contracts.
        We must prepare to modernize the dollar from a simple
    analog instrument into a digitized unit of account, one that
    measures, supports, and transacts those same digital
    commodities and contracts.
        We must future-proof the dollar today for that digital
    tomorrow. Doing so is in the national interest. It will spark a
    creed of new industries and economic growth. Yet, crafting it
    will be an enormous undertaking. It must be done carefully,
    thoughtfully, and deliberately.
        Something that is worthy of the dollar's global importance
    can't be rushed. It will take time to get right, but now is the
    time to get started.
        The recent launch of SpaceX reminds us that the United
    States explored outer space through a series of pilot programs.
    They were called Mercury, Gemini, and Apollo. So, too, we
    should explore a digital dollar through a series of pilots. The
    Federal Reserve is already looking at central bank digital
    currency--
        Chairman Lynch. The gentleman's time has expired.
        Mr. Giancarlo. Thank you very much.
        [The prepared statement of Mr. Giancarlo can be found on
    page 39 of the appendix.]
        Chairman Lynch. Ms. Kelley, you are up next for a 5-minute
    presentation of your written testimony.
        Thank you.

        STATEMENT OF JODIE KELLEY, CEO, ELECTRONIC TRANSACTIONS
                           ASSOCIATION (ETA)

        Ms. Kelley. Thank you, Chairman Lynch, Ranking Member
    Emmer, and members of the Task Force on Financial Technology.
    My name is Jodie Kelley. It is my privilege as CEO of the ETA
    to speak with you today on how the modern payments industry is
    using digital tools to deliver CARES Act stimulus money to the
    American people.
        ETA is a trade association that represents the broad group
    of companies that provide electronic products and services,
    including credit and debit cards, peer-to-peer products, mobile
    wallets, and other forms of digital payments.
        Ours is an industry that in North America alone, moves over
    $8.5 trillion a year in card and P2P payments securely,
    reliably, and quickly. During the 5 minutes I will speak today,
    over 1.3 million transactions will be processed. It is highly
    regulated, highly competitive, constantly innovating, and
    investing and leveraging new technologies to create better
    products and services.
        On behalf of ETA and its members, thank you for the
    opportunity to participate in this important discussion. The
    unprecedented challenges caused by the pandemic have
    appropriately caused policymakers not only to move quickly to
    address the immediate crisis, but also to ask how we can
    position ourselves to do even better in the future. That is a
    particularly important question when it comes to those who are
    most vulnerable.
        I am honored to be part of such a distinguished panel who
    bring a variety of perspectives on ways in which technology may
    be brought to bear to advance financial inclusion, and most
    relevant for today's hearing, to further improve delivery of
    stimulus money to those who need it most. These are important
    conversations that have potentially broad-reaching
    implications.
        The perspective I bring today is on what is happening now
    and the ways in which the electronic payments industry is
    bringing to bear the innovation, the technology, and the know-
    how it has developed over decades to deliver these stimulus
    funds quickly and securely. I am proud of the role that our
    industry is playing in delivering both economic impact payments
    and much-needed unemployment benefits.
        I would just like to highlight today in particular a few
    ways in which that is happening. The first is through the use
    of prepaid cards. This is a simple but effective solution which
    has long been deployed to distribute roughly $140 billion per
    year of government benefits, including SNAP and Social Security
    payments. Nearly all States also use these types of cards to
    distribute over $20 billion in unemployment benefits a year.
    And for consumers, these prepaid cards work. They are network-
    branded. They can be used to make purchases online or in stores
    in the same way a credit or debit card can be used. The funds
    on them are FDIC-insured, and critically, they carry the same
    consumer protections as credit and debit cards do. Most
    notably, they are protected from liability if the cards are
    lost or stolen, or if fraudulent charges are made on the card.
        And for those Americans with a smartphone--over 80 percent
    of us--there are additional benefits. These cards can be loaded
    into mobile wallets, bringing added convenience and additional
    security, and both the cards and the mobile wallets can be used
    simply by tapping at the point of purchase. There is no need to
    sign anything, no need to touch anything that is not your own.
    Surveys of consumers during the pandemic made clear that that
    provides peace of mind.
        I would also like to touch on peer-to-peer (P2P) payments
    such as PayPal, Venmo, and CashApp. These were also used to
    distribute stimulus dollars. These apps are popular. In 2019,
    they were used to transfer over $300 billion. And their
    popularity is growing, and it is growing because these products
    have quickly evolved in response to consumer needs. Individuals
    can now have their paychecks, their tax refunds, or their
    benefits payments sent directly to them. Consumers can load
    cash on the P2P services, they can store money, they can use
    them to make purchases, and they can use them to reload prepaid
    cards.
        As a general matter, consumers are not charged to use these
    services, and because they can be accessed through a
    smartphone, again, there is broad reach and it is easy for
    individuals to use them.
        Now, in my time this morning, I have only touched on the
    innovation that is happening in the electronic payments
    industry. Our members are investing tens of billions of dollars
    annually in research and development that harnesses and deploys
    technologies, including blockchain, to make it easier for
    individuals to accept, hold, and use money securely. And we
    will continue to integrate new ideas and technology to make the
    current global payment system stronger and safer.
        The future is exciting, but we also appreciate the
    opportunity, as we look forward to the possibilities, to take a
    moment to discuss what is already happening and the very
    tangible and real ways that current products and services are
    being deployed to meet the needs of individuals, including the
    underserved. We are keenly mindful of how important that is.
        So on behalf of ETA and our member companies, thank you,
    once again, for the opportunity to participate. I am happy to
    answer any questions that you may have.
        [The prepared statement of Ms. Kelley can be found on page
    99 of the appendix.]
        Chairman Lynch. Thank you, Ms. Kelley.
        Professor Ricks, you are now recognized for a 5-minute
    presentation of your written testimony.
        Thank you.

        STATEMENT OF MORGAN RICKS, PROFESSOR OF LAW, VANDERBILT
                         UNIVERSITY LAW SCHOOL

        Mr. Ricks. Chairman Lynch, Ranking Member Emmer, and
    members of the task force, thank you for the opportunity to
    testify today on this vital topic.
        My remarks will focus on the FedAccount proposal. The
    coronavirus crisis has highlighted critical shortcomings in the
    U.S. system of money and payments. The FedAccount proposal
    offers a compelling way for Congress to address these
    shortcomings. FedAccounts would improve the delivery of relief
    payments to American households during crises, and they would
    offer an array of other transformative benefits as well.
        So, what are FedAccounts? FedAccounts are digital dollar
    balances maintained on the books of the Federal Reserve. It is
    important to understand that the Fed already offers accounts to
    a small, favored set of clients. These accounts are called
    reserve balances, which are dollar balances maintained as
    ledger entries on the Fed's electronic books.
        The Fed's digital dollar accounts are highly attractive,
    offering instant payments, higher interest than ordinary bank
    accounts, and full government backing, no matter how large the
    balance, with no need for deposit insurance.
        But these accounts are currently restricted to an exclusive
    clientele, consisting of banks, certain other large financial
    institutions, and governmental entities. What this means is
    that the Fed currently issues two types of money: first, it
    uses paper dollars, an open access resource available to all;
    and second, it issues digital dollars, which are restricted to
    a small number of privileged financial institutions. This
    creates a striking asymmetry at the core of our monetary
    framework, and Congress should do away with it. Specifically,
    Congress should direct the Fed to give the general public,
    individuals, businesses, and institutions the option to hold
    digital dollar accounts at the central bank.
        Under the version of the proposal that I and my co-authors
    have described, FedAccounts would offer all of the
    functionality of ordinary bank accounts, with the exception of
    overdraft coverage. It would come with debit cards, for
    example, and they would support online bill pay. But the Fed
    would charge no fees and would not impose any minimum balance
    requirements.
        Moreover, the Fed could partner with the U.S. Postal
    Service to serve as a ubiquitous, ready-made, physical branch
    network for these accounts. The FedAccount program would
    transform digital dollars into an open access resource, a form
    of public infrastructure just like the paper dollars that the
    Fed issues.
        And this would offer a range of major public policy
    benefits. First, it would foster financial inclusion. If
    properly structured, the FedAccount program could bring
    millions of households into the mainstream of money and
    payments. This would not only lubricate future relief payments
    during crises, but it would also improve the economic well-
    being of low- and moderate-income families.
        Second, it would enhance consumer protection by lessening a
    consumer's need for expensive non-bank credit products, such as
    payday loans.
        Third, it would reduce the likelihood of financial crisis
    by displacing unstable deposit substitutes, which are a major
    source of instability in our financial system.
        Fourth, it would speed up payments. When it comes to
    payment speed, the U.S. lags behind much of the rest of the
    world. Payment delays are costly for the economy as a whole and
    are especially so for households living paycheck-to-paycheck.
    FedAccounts would ameliorate this problem, because all payments
    between FedAccounts would clear in real-time on the Fed's
    books, just like interbank transfers have for decades.
        Fifth, FedAccounts would improve monetary policies, because
    the Fed's interest rate adjustments would be transmitted
    directly to a wide swath of the public rather than just to
    banks, as they are today.
        Sixth, the FedAccount program could greatly reduce payment
    system tolls, because the Fed presumably would not charge
    interchange fees to merchants accepting its debit cards. This
    would be a boon to businesses large and small.
        Finally, FedAccounts would help maintain the dollar's
    status as the dominant global currency. As we speak, China is
    piloting its digital Yuan. If we don't innovate, we risk
    falling behind.
        Far from straining fiscal resources, FedAccounts would
    likely generate revenue for the Federal Government, provided
    the program attracted profitable large accounts and not just
    small accounts.
        Keep in mind, the Fed is a moneymaker for taxpayers. It
    remits tens of billions of dollars to the Treasury Department
    every year. With FedAccounts, those remittances would probably
    increase.
        To be sure, the FedAccount program will present
    implementation challenges. Cyber security, fraud prevention,
    and privacy issues would need to be addressed. However, as and
    I and my co-authors have described in our writings, these
    challenges are surmountable. Moreover, like other digital
    currency, it would rely primarily on efficient, reliable
    systems that the Fed has used successfully for decades, and
    FedAccounts would be fully integrated and seamlessly
    interoperable with the mainstream payment system.
        To conclude, FedAccounts could deliver an array of
    transformative public policy benefits, both in and out of
    crisis periods. The system of money and payments is a public
    good. It is critical public infrastructure, akin to highways
    and the legal system. The FedAccount proposal would supply this
    resource directly to the general public. It deserves serious
    consideration from Congress.
        Thank you again for the opportunity to testify today. I
    look forward to answering your questions.
        [The prepared statement of Professor Ricks can be found on
    page 114 of the appendix.]
        Chairman Lynch. Thank you, Professor Ricks.
        At this time, I would like to go back to the Honorable Mr.
    Giancarlo. Sir, I inadvertently shortened your time. You had
    another 45 seconds. So, I apologize to you for interrupting.
    There was a rogue chime that I heard in my headphones, and I
    cut you short.
        So, how about if I give you another minute? If you have any
    other ideas you would like to amplify on some of the things you
    raised, I would be happy to recognize you for 1 minute.
        Mr. Giancarlo. That is very kind, Mr. Chairman.
        There is a point I would like to make, which is that what
    we would like to see is exploration of the idea of a U.S. CBDC
    through a series of pilot programs. I mentioned the ones that
    we used to explore space, and I think a similar approach should
    be taken here.
        Throughout our history, America has been a leader in
    innovation. Whether it was launching the space program or
    building the internet, we brought to every one of those
    innovations our core values: the rule of law, individual
    liberty; free enterprise; and, importantly, the right to
    privacy.
        Around the world, CBDC innovation is gaining peak global
    momentum, and the world is asking what role America is going to
    play and whether our core values will be brought to bear.
        The choice is either that we take a leadership role or that
    we accept that others will take a leadership role and they will
    put their values in this new innovation. I think we have to
    choose to lead, and I think if we do, we will increase
    financial inclusion, enhance democratic values, and further
    improve the dollar for more generations to come.
        Thank you for that additional time. Those are my final
    remarks.
        Chairman Lynch. Thank you, sir. I appreciate that, and
    again, I apologize.
        I will now recognize myself for 5 minutes for questions.
        Based on the conversation today, a few things are clear. We
    have millions of Americans who are in need of help to weather
    this storm currently, and we have millions of Americans who are
    being shut out of the banking system, making it harder to get
    aid to them; but I think the panel here has described some
    measures that could certainly mitigate or possibly eliminate
    the challenges.
        One of the things I worry about is, even looking at the Fed
    right now--let's go to the FedAccounts issue. I have been
    watching over these last few years how the Fed has tried to go
    to this FedNow program, which is actually a miniature version
    of what we are talking about with FedAccounts. For those who
    are not familiar with it, the FedNow accounts were really meant
    to provide immediate relief to banks. The Fed is a bank to the
    banks, and they were trying this whole framework where they
    would do for the banks what FedAccounts would do for citizens.
    That process, the rule took 3 years, and now the
    implementation--I think we are talking about 7 or 8 years for
    the Fed to upload that program.
        So I want to ask, Professor Ricks and Professor Baradaran,
    what are we talking about here in terms of getting this up and
    running? We have this desperate need out there now that we all
    recognize and the structural inequities here. What are we
    talking in timeframe if we really focus on this, put resources
    towards it, best-case scenario, what do you think that looks
    like?
        Ms. Baradaran, I would like to hear from you first, if
    possible.
        Ms. Baradaran. I think it will take as long as we put our
    priority into it. If we want FedAccounts through postal banks,
    we can do that. We have the technology. There are a few things
    around the edges that we could do. We would need ATMs at
    certain post offices. We would need the Fed to do real-time
    payments and other types of efficiency things. But those are
    things that are well within our technological capacity, our
    institutional capacity. These are things that we can and could
    have done a year ago, so I think we could do that very quickly.
        Chairman Lynch. Okay. Thank you.
        And, Professor Ricks, could you amplify on that a little
    bit?
        Mr. Ricks. The FedNow initiative was an outgrowth of the
    faster payments initiative that the Fed started in or around
    2015, and we have been waiting a long time for this. There have
    been improvements. The clearinghouse, the private consortium
    has taken measures to improve payment speed and yet we are
    still lagging behind the rest of the world.
        The Fed itself has been processing real-time instant
    payments between accounts on its own for many, many decades
    through the Fed wire system, which is extremely efficient.
    Accounts on the Fed's own books are processed--the payments
    between them are processed extremely quickly in real-time. If
    you could put more accounts on that system, you will have more
    real-time payments. Now, how long does that take? Well, the Fed
    has been opening accounts on its own books since its inception
    and processing payments between them.
        Retail operations are a different matter, and that would
    take some time for the Fed to build out that infrastructure;
    but in the meantime, it could rely on contracting with private
    sector contractors, external service providers in the banking
    system itself to assist until it could build its own
    infrastructure.
        So if it is a priority, it could be done very, very
    quickly.
        Chairman Lynch. That is great to hear.
        Ms. Kelley, in your testimony you mentioned Venmo and some
    of the new apps that are out there, and new technology that
    really has expanded access to people who are comfortable with
    that technology and those who have access to these smartphones.
    It is really amazing.
        Do you see any gaps in sort of our technology
    infrastructure that might be needed in order to push this out,
    to get that segment of the population that is not participating
    right now?
        Ms. Kelley. Thank you. That is a great question.
        What I would say is, 80 percent of Americans have
    smartphones and have great facility with them. Clearly, there
    is still a gap, with the 20 percent who don't, but the number
    of smartphones is increasing, the use of them is increasing. I
    just also want to highlight, for those middle- and low-income
    consumers who may not have them, they have indicated they
    prefer debit cards, they like using debit cards, so there is a
    combination of technologies, I think that is well-positioned to
    deliver.
        Chairman Lynch. That is great. Thank you.
        My time has expired. I will now recognize the ranking
    member of the task force, Mr. Emmer, for his questions.
        Thank you.
        Mr. Emmer. Thank you, Mr. Chairman. Hopefully, you can hear
    me.
        I want to thank the panel for being here today, and
    participating under these unusual circumstances, and I
    reiterate that I hope we get back to work in Washington, D.C.,
    and do our job because if we don't want to show up, I am sure
    there are a lot of people who would be happy to replace us.
        This one is for Mr. Giancarlo. Under your proposed plan--
    and that is what I am going to call it, your White Paper I
    think that you recently put out--would the Federal Government
    have the technical capability to deny access to or shut down
    the accounts of persons who are abiding by the law?
        Mr. Giancarlo. Simply, no. We have a long tradition of
    privacy rights. It is enshrined in our Constitution in the
    Fourth Amendment, and I think actually if we do CBDC right and
    bring to it those values, I think an American CBDC could be the
    killer app compared to other sovereign CBDCs where there is not
    the same expectation of privacy from government surveillance,
    such as ones coming out from nondemocracies.
        So, I think programming into a central bank digital
    currency, a level of individual privacy that accords with our
    society's value is vitally important and actually could be very
    attractive in a global setting.
        Mr. Emmer. That is great.
        Continuing with that, Mr. Giancarlo, under your proposed
    plan, would personal details from payment activities be
    available to law enforcement without a search warrant, either
    as names of senders and recipients, amounts sent, or any other
    revealing metadata generated by digital dollar payments?
        Mr. Giancarlo. I would certainly hope not.
        Mr. Emmer. That is not the intent, right?
        Mr. Giancarlo. That is certainly not.
        Mr. Emmer. Okay.
        Mr. Giancarlo. We value privacy very highly. It is
    interesting, if you look around the world, say, in Europe, for
    example, the Europeans are very sensitive about
    commercialization of their data, and yet in their law, the
    General Data Protection Regulation (GDPR), they don't have the
    same restrictions against government surveillance.
        In the United States, we are more comfortable with
    commercial use of our data, but we are very sensitive about
    government exploitation. We have it enshrined in our
    Constitution.
        I think if we make sure that the jurisprudence is developed
    around this and those values are reflected in the U.S. digital
    dollars, the central bank digital currency (CBDC), I think it
    could be very attractive on a global and a domestic basis.
        Mr. Emmer. At some other time, I would love to have more
    discussion with you about the idea that Americans are more
    comfortable with the commercial use of our data. I disagree
    with that. I think this is going to be a place where we are
    going to have to do some work in terms of how much information
    Americans actually have about how their personal data is being
    used for commercial purposes, and I think that is a different
    frontier.
        But I do agree with you on the privacy issues, obviously,
    and that is why I wanted you to emphasize that.
        Thank you.
        Ms. Kelley, if I could change gears a little bit, I wanted
    to take this opportunity to praise the Administration for the
    speed in which the Administration got the majority of the
    stimulus payments out the door. This has clearly helped
    Americans who need the money the most.
        With that said, I think it is essential that we work to get
    money to the remaining 35 million American citizens who have
    not received their stimulus payments as fast as those others.
    Many of these citizens are unbanked and have bills coming due
    and need the money. Treasury, through the Bureau of the Fiscal
    Service in the IRS, has attempted to reach citizens through
    existing programs. It seems that Treasury could look at
    alternative payment solutions, like new digital channels that
    provide instant access to funds to reach these unbanked
    individuals.
        What is your suggestion for Treasury to identify more
    effective, efficient modern payment solutions, aside from
    prepaid cards and sending paper checks?
        Ms. Kelley. Thanks for that question.
        We agree completely that it is critical to get these
    dollars in the hands of those Americans who need them and to do
    so quickly, and we are mindful, as you are, of the fact that so
    many have not yet received the payments. We agree that checks
    are not the right way to go for all of the reasons that the
    panels have discussed. It is slow, you then have to cash the
    checks, which can be expensive and difficult, and then once the
    checks are cashed, you have to do something with the cash.
        We think in the very short term, leveraging existing
    programs is the way to go. It works. We know it works. It is
    being used and has been used successfully. But we agree that
    industry should work in partnership with government to
    determine ways in which we can deploy additional technologies,
    both to get these current payments out but also to position for
    the future.
        But for now, we think both of the mechanisms that we
    described are actually working relatively well and, because
    they are available and immediate, would be the things that we
    recommend turning to in the short term.
        Mr. Emmer. Thank you.
        Thank you, Mr. Chairman. My time has expired.
        Chairman Lynch. The gentleman yields back.
        The Chair now recognizes the gentleman from Georgia, Mr.
    Scott, for 5 minutes.
        Mr. Scott. Thank you very much, Mr. Chairman.
        As I am listening to this exciting and exuberant
    conversation, I am 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 for our
    younger generations.
        When I listen to the information that our panelists are
    passing out, I am aware of how rapidly we are moving to a
    cashless society, without cash, and doing this without any
    regard to how, do we bring our American people along with us,
    how do we bring along our younger generations?
        Did you all know, for example, that out of 50 States in our
    nation, only 17 of our State school systems even offer one
    course in financial education or financial literacy? And then,
    with this technology coming in, as wonderful an asset as it is,
    it is making our financial system far more complicated.
        And as you move from a cashless society, there are certain
    segments of our population who are not even on board the train:
    65 percent of African Americans conduct their financial
    transactions in cash. When you put that together with only 17
    of our State school systems even offering one course in
    financial education, we need to begin to draw our attention to
    it and make sure we are bringing our full nation along with us
    as we move in what is warp speed with this technology.
        Having said that, let me start with you, Ms. Kelley. With
    the 2008 crisis that came along, it took 10 weeks to get the
    stimulus checks out. With this crisis, it took 2 weeks. Now,
    that is a really good improvement. What do you attribute that
    improvement to?
        Ms. Kelley. It is definitely true that as we have moved
    forward in time, our ability to push money out has improved
    with it, and we are moving more quickly this time than we did
    in the last instance that you referenced. But I would also say,
    as others have said, it is equally true that they are not
    moving quickly enough, and that there is more that needs to be
    done.
        And there are different things that we are doing this time,
    like increasing the use of prepaid cards, and increasing the
    use of digital tools, including P2P, that have helped with that
    clearly and that can help more if we rely on them more, if we
    rely on them further and really kind of leverage what we are
    doing well now to do better.
        Mr. Scott. Good.
        Let me move to another area that I have been working on,
    and that is frauds and scams as we have moved along,
    particularly with the stimulus checks, and using--the thieves,
    the scammers out there are using our advances in technology to
    create even more creative ways of doing the scams.
        And I would like to ask you--and, Mr. Giancarlo, if you are
    there, I know that you were a former Chairman of the Commodity
    Futures Trading Commission (CFTC), and it was wonderful to work
    with you over in my committee, CEAC, on several of those
    issues, and I know the CFTC has been very interesting; but how
    can--what do you all see on how we can get greater safety and a
    concern with the different techniques of scams that are out
    there?
        Chairman Lynch. The gentleman's time has expired, but we
    will allow Mr. Giancarlo to answer the question.
        Mr. Giancarlo. Thank you very much. I don't see myself on
    the screen, so I hope you can see me.
        When I was at the Commission, with your great support, we
    really had a very strong enforcement program because, as the
    technology moves on, the fraudsters and the scammers move along
    with it. And it is critically important that regulatory
    agencies that have enforcement efforts and have enforcement
    powers stay ahead of the technology so they can stay ahead of
    the next generation of fraudsters and scammers.
        Mr. Scott. Thank you.
        Mr. Giancarlo. Thank you.
        Chairman Lynch. Thank you to the gentleman, Mr. Scott.
        Next, we have the Full Committee ranking member, the
    gentleman from North Carolina, Mr. McHenry, for 5 minutes.
        Mr. McHenry. Thank you, Chairman Lynch.
        My question is for you, Mr. Giancarlo. Can you explain why
    the digital dollar is such an important tool? Just the top line
    here, in a succinct way, what does the digital dollar have to
    do with financial inclusion in government subsidies? Why don't
    we start there?
        Mr. Giancarlo. Well, it is so important, for the reasons we
    are talking about, because we have populations that are
    underbanked and unbanked, and they are a diverse population.
    There are a lot of reasons. Some of those are young people who
    just have not yet come into--they don't have mortgages and they
    don't have automobiles, and they have very rudimentary banking
    activities, but they are very skilled with smartphones and
    mobile devices, and that is a way of reaching them. It is about
    reaching--it is about onramps into the financial system and
    making them as simple and as accessible as possible. And for a
    new generation, this is how--you go to where they live, and
    this is where they live. They live in an underlying mobile
    environment. Let's bring it to them.
        Mr. McHenry. Okay. But many folks live in rural America,
    and they live in areas that I like to refer to--I think they
    should be referred to as, ``banking deserts.'' Just like we
    have food deserts in urban areas, we have banking deserts in
    certain communities in urban areas, and certain communities in
    rural areas. And so if you travel across the country, you
    recognize this, and you see they don't have access to branches.
        So, how would something like a digital dollar help these
    folks?
        Mr. Giancarlo. During my time with the Commission, I
    traveled around the country, and I met with folks in rural
    areas, and the big issue for them is broadband access. I met
    with agricultural producers who use their mobile devices to
    look up prices that are trading in places like Chicago for
    agricultural commodities to know that they are getting the
    right price at the grain elevator. Once they go out of
    broadband access or wireless access, then they have trouble
    with that. They are sophisticated as well. We need to get them
    access; but if we do, the lack of a branch bank is not
    insurmountable because they can have that access on their
    mobile device.
        Mr. McHenry. Okay. So to that point, access to broadband
    and access to a mobile phone, would that access issue be a
    barrier to accessing the digital dollar? How do you remedy
    that?
        Mr. Giancarlo. No. I think it would actually be a direct
    onramp to a digital dollar. What is a digital dollar? It is the
    same thing as the dollar in your pocket, only it is on your
    mobile device. And we have a big problem with mobile access in
    rural areas, but if we solve that, the facility that people
    have with the mobile phone is great.
        There are populations--and I think Mr. Scott mentioned
    this--with folks who have just been outside the banking system
    but are very comfortable with the notion of bearer instruments
    and fiat currency. They may also find that a digital currency
    is a starting point to come into greater financial inclusion
    easier than actually going to a bank. Even if there was a bank
    in their district, they might find a mobile device to be an
    easier access point.
        Mr. McHenry. Okay. So what you are suggesting is this could
    be a major answer for people accessing even basic governmental
    benefits, not sophisticated and complicated issues of
    commodities trading, but just basic access to the benefits that
    they are rightfully due under the law; is that--
        Mr. Giancarlo. Yes, it is. And I think that, if we think
    about benefits, the cost in the infrastructure perhaps for
    certain populations making mobile devices available may be
    lower costs than actually trying to make bank accounts
    available to them, at least as an entry point into CBDC.
        Mr. McHenry. Okay. So what about our competition with
    China, can you touch on that? How does it play a role in this?
        Mr. Giancarlo. I mentioned this in my opening statement. I
    think it is about values. Look, China is going to do what China
    is going to do, and they see this as an opening. They have a
    phrase in China called, ``passing on the curve.'' The curve is
    that whenever there is a technological change, they see that as
    an opportunity to get a jump on their competition. And they see
    this, combined with their Belt and Road Initiative, as a major
    opportunity to move out of the global banking system which the
    United States dominates.
        They have to do what they have to do. Their currency is not
    a global reserve currency. So, they have an opportunity here to
    take advantage. We, though, think about it in different terms,
    and that is, how do we make sure that our values are brought to
    bear in this new technology? Because this is coming. The
    question is, what role do we want to play in it, and are we
    determined to bring our values to bear or are we willing to
    live with the values of our economic competitors brought into
    this new round of things?
        Mr. McHenry. Thank you. Thanks for your testimony.
        I yield back.
        Chairman Lynch. The gentleman yields back.
        The Chair now recognizes the gentleman from Utah, Mr.
    McAdams, for 5 minutes.
        Mr. McAdams. Thank you, Mr. Chairman.
        Ms. Kelley, I am going to direct my first question to you.
    As you know, as Congress responded to the coronavirus pandemic,
    we faced a choice of moving quickly or responding perfectly,
    and I think we made the correct choice by responding quickly.
    And many of those programs have now been implemented or are
    underway, whether it is the Paycheck Protection Program or the
    economic stimulus payments, and many of your member companies
    have been involved in both of those programs and others.
        So my question is, taking a step back and thinking toward
    the next economic or other crisis and what we can do to prepare
    now for that crisis, what are some of the lessons that we have
    learned from our COVID response? How can we improve delivery of
    benefits to businesses and individuals moving forward, and what
    role can new technologies play in delivering those benefits?
        Ms. Kelley. Thank you for that question, Congressman. We
    applaud the actions of Congress in moving quickly to respond to
    the crisis. And we agree that the impetus to move quickly and
    the quick action was the right call.
        In terms of taking a step back and looking at lessons
    learned and where we are today, there are a few I think that we
    can draw already and others that we will clearly draw over
    time.
        First, I think there is a real need for government and
    industry to come together and identify exactly what it is we
    are trying to accomplish, whether it is getting dollars in
    people's hands quickly across a broad spectrum or otherwise,
    determine what is available and where there are gaps, and then
    look for existing tools to fill those gaps and particularly
    technology tools.
        There are so many fintech tools out there that can be
    deployed. As we were doing this in real time, obviously, that
    is difficult to do, but now that we have a moment to take a
    breath, I think it is the time to do it.
        I also just think we should leverage what we have. As we
    discussed, surveys of unbanked and lower- to middle-income
    Americans demonstrate that they actually prefer to spend using
    debit cards. Well, through this crisis, we have put those in
    people's hands. Some people already have them as part of their
    government benefits, but they now have them as part of this. We
    should be out there educating people on how they can use them,
    making sure they hang onto them, because now that they have
    them, if we need to act again, we can quickly do so, so,
    leveraging what we already have.
        And I just want to make one more point with respect to them
    that is important. We talked about the fraud that inevitably
    comes up when there is a crisis like this. That is true. That
    is an added benefit of these debit cards. They protect
    consumers from fraud. So if they are lost or they are stolen or
    they are scammed or a bad actor gets ahold of them, that
    provides protection to a population that really, really needs
    it, and that we provide.
        Mr. McAdams. So I guess to any of the other panelists, any
    lessons learned from this pandemic that might be applied to the
    future?
        Mr. Giancarlo. If I could make a suggestion, I think we do
    need to explore this new innovation. We need to start exploring
    the next level of technology side by side with the existing
    accounts-based technology if, for nothing else, to build
    greater redundancies in the system, but also greater
    optionality, and more tools in our toolbox to use in crises
    like this.
        Ms. Baradaran. And I think I want to underscore what Ms.
    Kelley said here. It is using the tools that we have very
    quickly, and I think this is one of the things--she is right.
    Most people, under $50,000, prefer to use debit cards. And so,
    how do we meet people where they are at, and make sure our
    solutions match the problem and is not something that we want
    on the other side?
        So what we want is a blockchain basis, and we can discuss
    that, but the problem here is the banking deserts. It is the
    unbanked and underbanked who--and we have the technology to
    meet those needs. And so, I think that is critical at this
    juncture.
        Mr. McAdams. Thank you.
        Mr. Chairman, I yield back.
        Chairman Lynch. Thank you, Mr. McAdams.
        The gentleman yields back. We will now go to the gentleman
    from Arkansas, Mr. Hill, for 5 minutes.
        Mr. Hill. Thank you, Mr. Chairman. I want to thank you for
    this terrific hearing. I want to thank Lisa and Clement for
    maintaining our technology for our committee, and I
    particularly want to thank Full Committee Chairwoman Waters and
    Ranking Member McHenry for recognizing back in the autumn of
    2018 that a FinTech Task Force was essential for the United
    States to review its regulations, review its laws, review State
    laws, and make sure that we can be competitive globally as the
    financial services industry continues its migration from paper
    to analog to a fully digital distribution system.
        And, of course, as a Vandy graduate, it's always good to
    have a professor from Vanderbilt. ``Anchor Down,'' Professor
    Ricks, I'm glad to have you here.
        Mr. Ricks. I want to mention first this issue of
    underbanked, particularly in rural areas and the number of
    counties that now no longer have a physical banking location. I
    spent a good part of my career in community banking in a rural
    State, Arkansas, so I'm very familiar with this challenge. It
    is particularly bad in our large rural States in the western
    part of the country.
        Part of this is the way we regulate. The Herfindahl-
    Herschman Index, which governs bank mergers and forced
    divestitures, and the Fed's determination of who gets to buy
    banks, really have contributed to this. In other words, we have
    forced banks to divest of branches in small rural towns, even
    though their share of deposits isn't even a very accurate
    measure of banking concentration any longer. It is a very old
    idea and no longer relevant. And this hearing is an example of
    why it is not really relevant.
        Second, the Fed limits those branch sales mostly to other
    banks. And we have a lot of innovative credit unions, small
    credit unions, Community Development Financial Institutions
    (CDFIs) and other institutions that would love to serve
    customers in some of these rural environments, or somebody
    doing a partnership in that effort. So I think we need to think
    differently about rural banking particularly, and that is not
    to say there aren't urban challenges in this arena as well.
        Let me turn to this issue of the Fed also being the central
    public utility deliverer. Professor Ricks, great presentation,
    and, academically, I think it is elegant. I have seen this in
    other countries, this kind of thing, a postal bank as a
    centralized delivery for consumers. I worked in eastern Europe
    in the early 1990s after the Berlin Wall fell. Of course, those
    countries were trying to get away from the one-size-fits-all
    postal delivery system, but it doesn't take anything away from
    your idea.
        Representative Bill Foster and I have worked mightily on
    this digital dollar issue. And I would like to ask Mr.
    Giancarlo, you are really talking about a digital dollar, which
    Bill Foster and I have really supported the concept of since we
    have written the Fed and the IME about this, and you are
    creating that government digital dollar, but you are allowing
    other people to use it and set up payment rails. You are not
    proposing to centralize that digital dollar at a Fed-only
    distribution network. Is that right?
        Mr. Giancarlo. That is correct. So it would be--
        Mr. Hill. Tell us a little bit more about that?
        Mr. Giancarlo. Yes. It would be distributed through the
    existing two-tier banking system. It would be created by the
    Federal Reserve, and distributed through commercial banks and
    other entrants that would be subject to an appropriate level of
    regulation against reserves that would be posted by banks to
    the Federal Reserve, in the same way the dollar is distributed
    now. And then the distribution ledger would be created, would
    be able to be written at the point of utilization. So, that
    could be at the bank use or perhaps even at the wallet use, but
    with the Anti-Money-Laundering/Know-Your-Customer (AML/KYC)
    provided, subject to appropriate standards.
        And it may be that it is provided by wallet providers, by
    existing financial solution providers or others. But it would
    be a widely distributed but not a totally decentralized system.
    It would be distributed through regulated actors in the
    marketplace.
        Mr. Hill. Thanks. I noted when David Marcus, who is the
    former CEO of Libra, testified several times last year, he
    said, ``We would use a digital dollar if it existed.'' Now,
    that may be sales talk to the Members of Congress on his part,
    but thank you, Mr. Lynch.
        And I yield back.
        Chairman Lynch. Thank you. The gentleman yields back.
        We will now recognize the gentleman from Ohio, Mr.
    Davidson, for 5 minutes.
        Mr. Davidson. Thank you. And I appreciate everyone for
    participating in this hearing. And the process is a little
    different. I echo the desire to do things live and in person,
    but at least we are live. So, thanks for the work that it has
    taken to get us to here, and at least we are using some form of
    technology here for the hearing.
        I would ask unanimous consent to submit for the record a
    letter that several of my colleagues, including Ranking Member
    Emmer, co-signed to the Secretary of the Treasury, asking for
    him and his staff to look for ways to integrate blockchain
    technology into our response to this public health crisis.
        Chairman Lynch. Without objection, it is so ordered.
        Mr. Davidson. Thank you. Many American companies are on the
    leading edge of blockchain technology. And I believe China's
    recent adoption of a fintech platform, along with the awareness
    that delivery of COVID-related payments could be improved, has
    generated renewed interest in the power and capabilities of
    blockchain, including moving payments securely, quickly, and
    transparently.
        I will also add that I have been proud to participate in
    events hosted by Women of Color in Blockchain, and Coinbase,
    organizations that have shown that blockchain is a force of
    financial and entrepreneurial inclusion and diversity that I
    think members of this committee should take seriously,
    particularly as we have put a lot of emphasis on underbanked
    and unbanked people.
        However, I am concerned that our laws or, more accurately,
    our lack of laws and lack of regulatory clarity within the
    digital asset space will hamper the innovation that needs to
    take place here in the United States, which is why I continue
    to stress the importance of a bill I have introduced called the
    Token Taxonomy Act. It is a bipartisan bill cosponsored by
    Democrats and Republicans, including many members of this
    committee.
        The bill would help regulators, industry, and consumers
    have certainty and clarity about when securities law would
    apply to distributed ledger-based projects. The bill has
    received supportive statements from organizations such as the
    U.S. Chamber of Commerce, the Blockchain Association, NASDAQ,
    IBM, and the Coin Center.
        We are here today, though, to discuss the government's role
    in adoption of financial technology to improve the delivery of
    payments to individuals. And I have joined several colleagues
    in the letter referenced.
        Mr. Giancarlo, you are a well-regarded subject matter
    expert in this space, and really moved the U.S.'s role far down
    the road in your previous role at the CFTC. You have clearly
    taken an interest in the whole space, not just in the central
    bank digital currency (CBDC). As you look at it, what drives
    the need for a central bank digital currency versus other types
    of digital tokens such as stablecoins, cryptocurrencies or
    other existing tokens in the space?
        Mr. Giancarlo. Please don't perceive any of my advocacy for
    development of a U.S. central bank digital currency to be a
    call for any suppression of, or moving away from, these other
    efforts. I think in our free market system, America has always
    innovated, with a lot of innovation going on simultaneously,
    and it is for the marketplace to determine which of those new
    innovations are appropriate and receive the public's patronage.
        And so, I think we have benefited to some degree from the
    launch or the work of Libra to see inefficiencies in our own
    system, and yet at the same time, I view a U.S. central bank
    digital currency as a fundamental element of the economy.
        Our economy is built upon the dollar. If we don't modernize
    the dollar for modern times, then it will be like our airports
    and our public transportation systems; it will become
    increasingly out of date.
        All of the economic activity that is built upon the dollar
    relies on the dollar to modernize. And as we watch these other
    innovations going on, we see the creativity around them, the
    exploration they are doing. We need to take some of that and
    apply it to our dollar itself so that it stands the test of
    time.
        Mr. Davidson. I think that was well-said. I have likened
    some of our approach in this space to the Sears Roebuck
    approach to retail, and we certainly don't want to replicate
    that effort.
        My time is rapidly fading away, but briefly, when you think
    about all of the use cases, so much in the blockchain
    technology is focused on payment systems and currency. In fact,
    so much of the language refers to it as, ``cryptocurrency.''
    Could you maybe highlight the importance of blockchain beyond
    just payment systems and technology, and the opportunity we
    have if we had regulatory clarity.
        Mr. Giancarlo. I had the honor to serve at the U.S.
    Commodity Futures Trading Commission, which oversees some of
    the world's largest markets for hedging and some of the world's
    most important commodities and contracts, whether they be
    agricultural commodities like soybeans and cotton, whether they
    be mineral commodities, whether they be energy products or some
    of the world's most important contracts, hedging instruments.
    All of them are priced in dollars. That is an enormous
    advantage to the United States. It is one of the many
    underpinnings of the dollar supremacy, that the world hedges
    its exposure to all of those commodities in dollar markets.
        All of these commodities are moving to a digital format.
    They are going to go onto distributed ledger. They are going to
    become tokenized. They are going to become programmable. How
    long can the dollar remain a world reserve currency if it does
    not also become digitized, programmable, so that those
    instruments can be converted into this new digital format? This
    is a sea change. This is a new wave of the internet that is
    coming over us. It is going to have profound ramifications, and
    we need to innovative alongside of it. We can't stand still.
        Mr. Davidson. Thank you so much. My time has expired, and I
    yield back.
        Chairman Lynch. Thank you. The gentleman yields back.
        We will now go to Mr. Steil of Wisconsin for 5 minutes.
        Mr. Steil. Thank you very much, Chairman Lynch. I
    appreciate you holding today's hearing. I, too, look forward to
    being back and in person for future hearings in Washington.
        I think we are diving into a terrific question, which is,
    how do we get more people banked? How do we increase our
    inclusion in the financial services space? And as I am reading
    a lot about the potential in particular on the FedAccounts, I
    think it is a bit of an incomplete solution.
        So, what I would love to do if I can, Mr. Chris Giancarlo,
    is ask you a question about, where else can we look inside
    these regulatory burdens that we place on traditional
    depository institutions that, if reformed and if we make the
    adjustments, would actually, just using our current system,
    really create access for the unbanked to join the current
    financial services system?
        Mr. Giancarlo. Please don't read anything into what I am
    saying to be pouring cold water on the need to modernize our
    banking system, to further financial inclusion, to bring
    participants who should have bank access into that. We need to
    do that. And I think some of my fellow panelists have explored
    some very good ideas on this, and their expertise on this is
    greater than mine. My background is as a market regulator, not
    a banking regulator.
        But I also believe that this new CBDC technology provides a
    way to both move into the future, to--the great Wayne Gretzky
    says he was successful because he skated to where the puck is
    going. This is where the puck is going. We need to skate to
    where the puck is going. But that doesn't mean we should not
    still take steps to further financial inclusion. Issues of
    banking deserts are really important issues.
        So we do need to take steps, and there are some very good
    ideas out there. I wish my expertise was deeper in this to give
    you specific suggestions, but we have a great panel who can.
        Mr. Steil. I appreciate it. I just think it is important to
    reiterate that inside this discussion of what I think is a bit
    of an incomplete solution on the Federal accounts, is to make
    sure that we don't take our eye off the ball, on the importance
    of reviewing what is a heavily regulated sector of our economy.
        And removing some of these unnecessary barriers, I think
    will actually have a positive impact on individuals who have
    been historically underserved and those who are deserving and
    in need of bank access.
        Let me shift gears for you, Mr. Giancarlo, if I can, and
    come back to you again. And in particular, as we look, China
    has begun experimenting with digital currencies, and it has
    been commented on, could you just continue that discussion
    about the potential implications of a Chinese digital currency?
    Because I think what we need to be aware of is, as you said, go
    where the puck is going for the great Wayne Gretzky.
        But what is China doing today? What should the United
    States be doing? And as China is moving forward, what are the
    implications for the U.S. as a world reserve currency, U.S.
    sanctions enforcement, consumer privacy in trade? If you could
    just comment, obviously briefly, here.
        Mr. Giancarlo. To explore that, perhaps I could just paint
    a picture of, say, a few years from now in East Africa there is
    a city of, say, 4 million people and it has one water
    purification plant built by China under its Belt and Road
    Initiative.
        It will use 5G technology and sensors built in that plant
    to indicate when the plant is running low in chlorine, for
    example. It will send a 5G message back to a Chinese supplier
    that will supply that chlorine.
        But here is the important thing: It will be paid for in
    digital RMB directly to the Chinese supplier. It will totally
    bypass the global banking system, which we in the United States
    have dominated, but which is also the basis of sanctions power.
    Sanctions power is a way of dunning bank activity.
        So China is building this very thoughtfully, but they will,
    within their Belt and Road Initiative, be outside of a banking
    system.
        Now, China has its reasons for doing what it has to do, but
    do we sit still or do we also explore this technology and bring
    to it the values that we have brought to the space program,
    that we have brought to the internet: values of privacy; values
    of government with respecting the rights of individuals and not
    seeing it as a means of surveillance; the rule of law; et
    cetera, et cetera. That is why we can't sit still.
        This is going to be a very powerful new technology. We have
    used that in the past. We need to use it in the future to be a
    leader in that new technology.
        Mr. Steil. Thank you very much. I couldn't agree more that
    we need to be forward-thinking, and forward-looking to make
    sure that we remain globally competitive, in particular against
    the Chinese, who are moving aggressively in the financial
    services space.
        I appreciate your time, and everyone's time here today.
        And I yield back. Thank you.
        Chairman Lynch. The gentleman yields back.
        I am now happy to recognize the full committee Chair, the
    gentlelady from California, who has been the leading advocate
    for inclusive banking and using FedAccounts to accomplish that
    purpose, Chairwoman Waters.
        Chairwoman Waters. Thank you so very much, Chairman Lynch.
    I certainly appreciate your leadership. I appreciate this
    hearing we are having today, but I appreciate more than
    anything the fact that you have been in the leadership of
    dealing with the problem that so many of us have been concerned
    about for so long, and that is, what are we going to do about
    the unbanked?
        People in America continue to lack access to basic banking
    services, which has slowed the delivery of stimulus payments
    from the CARES Act. In fact, nearly 35 million people have
    received paper checks, not direct deposits to their bank
    account.
        However, I am concerned that the people who most likely
    need stimulus payments may not even be able to deposit a paper
    check.
        Some reasons that folks say they are unbanked include:
    distrust of banks; not having enough money to maintain a bank
    account; and a lack of accessibility to a branch bank.
        Fintech companies are stepping into the unbanked space by
    marketing digital wallets as low-barrier alternatives to bank
    accounts for U.S. consumers.
        And so to Professor Ricks, you have penned a proposal to
    use FedAccounts to quickly deliver stimulus payments to all
    individuals in a crisis. I agree with you, and I have drafted a
    bill that I would like to have your comments on, a bill that
    would use this delivery mechanism to require the Fed to provide
    $2,000 in monthly payments for adults, and $1,000 for every
    child, until the pandemic ends.
        Would you briefly describe how this proposal could help
    bank the unbanked and be a more efficient and equitable way to
    deliver stimulus payments? How does this proposal compare to
    what fintech companies are doing to provide financial services
    to unbanked households? And if you have been through this
    before I joined the hearing today, please just say so.
        Mr. Ricks. Thank you so much, Chairwoman Waters. Just by
    way of context, Congress had hearings in the late 1980s on the
    problem of the unbanked, and here we are more than 3 decades
    later still facing the same issues.
        The Federal Reserve Board gave testimony at that hearing in
    1989 and said, ``Don't worry, private sector innovation is
    going to solve this problem.'' And here we are 30 years later,
    talking about the same problem. So we should applaud and
    celebrate private sector innovation and technology
    developments, but it shouldn't be an excuse for public policy
    stasis.
        When the Fed was created, at the time it was created,
    before it was created bank notes themselves, paper money was
    issued by the private banking system. We created the Fed and it
    took on that role.
        And most of us think that was a good idea, that the Fed
    should be in the business of offering physical paper currency
    to the general public as a resource. The question is whether we
    should do that now that we are in the 21st Century. The same
    thing for digital money, and that is what FedAccounts are. It
    is a form of digital money on the books of the Fed.
        And this could be offered. It is an attractive, and
    compelling way to deal with the problem of the unbanked, which,
    as you know very well through your leadership, Chairwoman
    Waters, has been on the public policy agenda for decade after
    decade, and we still face the same problem and talk about it
    again and again.
        At some point, direct public provisioning needs to be part
    of the conversation. Other countries have 99 percent bank
    account penetration. Here we do not, and we need to figure out
    actual public policy solutions.
        Chairwoman Waters. Thank you so very much. I appreciate it.
        And I yield back the balance of my time.
        Chairman Lynch. The gentlelady yields back.
        I would now like to recognize the gentlelady from Michigan,
    Ms. Tlaib, for 5 minutes.
        Ms. Tlaib. Thank you so much to Chairwoman Waters, and
    thank you so much to Chairman Lynch for this hearing. I also
    want to thank your leadership in making sure that everyone
    stays safe during this pandemic, including our witnesses who
    don't have to travel all the way down to Washington, D.C., and
    risk their lives. So I appreciate that and that we are putting
    public health first.
        As you all know, I represent the third-poorest
    congressional district in the country, so this is a really
    critical issue to my neighbors. And we got hit really, really
    hard, not only public health-wise with COVID, but also the
    economic instability that was created because so many of my
    residents were already in survivor mode before the pandemic.
        I know, as you all have already testified, that many of our
    folks don't really understand what options are out there, but
    even more significantly, they don't have access to broadband.
    So a lot of them don't really truly understand the alternative
    opportunities out there. And, as many of you know, I introduced
    the Automatic BOOST to Communities Act (ABC Act), which would
    only use/deliver cash assistance through preloaded debit cards,
    but would also use the data and that infrastructure as a way to
    build out FedAccounts, postal banking, and digital accounts and
    eCashing systems.
        Professor Baradaran, in your research you wrote about the
    need for postal banks and how that could provide services to
    unbanked and underbanked communities, and my community as well,
    in rural areas. Could you talk to us about that?
        Ms. Baradaran. Sure. So if we are going to talk about what
    people are doing abroad, every single country practically,
    China, India, all of Europe and the United States from 1910
    until 1966. Postal banks are a natural ally to the Federal
    Reserve central bank banking system, and the reason is because
    they have the footprint in every community, regardless of cost,
    because that is the mission of the Post Office. It is a very
    democratic institution.
        And so by linking up the payment system, this is not a
    technology problem. The payment system is already there.
    Linking up the payment system to the Post Office so people can
    go, take out cash and use that money. And if we want to move
    toward any of these policies, then we need that one crucial
    step of that cash-digital divide, and that is what postal banks
    do. It is what they have done here. It is what they do abroad.
        So if we want to follow other countries' lead, we could,
    but we also are leaders. Our Federal Reserve is probably the
    best payment system in the world. It is the most trusted. It is
    the most secure. And so, we can just make it a little bit
    better. We don't need to follow in this. We can lead.
        Ms. Tlaib. Thank you so much. I would love for you to take
    a look at the ABC Act.
        Ms. Kelley, it took the IRS about 10 weeks to start
    distributing the 2008 stimulus payments after enactment. By
    contrast, the IRS delivered the first round of the CARES
    payments 15 days after the enactment, mostly via direct
    deposit, as you probably know, though some have still not
    received their payments yet.
        I know many of my colleagues on the call, probably get
    calls still. Not only that, mix-ups where there is a married
    couple who only get the $1,200; they don't get the payment for
    the spouse. So, it is just disastrous.
        Would the technology described in the Automatic BOOST to
    Communities Act, with the preloaded debit cards, with eCash,
    eWallets, postal bank and FedAccounts, be able to kind of
    address the issue around some of these implementation problems
    you see now with paper checks?
        Ms. Kelley. Thank you very much. We agree completely that
    paper checks are not the way to go, for reasons that we have
    discussed, for every reason, the expense associated with them,
    the length of time it takes to get them. That is the wrong way
    to go.
        I think there are lots of interesting proposals out there.
    As we discussed, I think they are worthy of conversation and
    study. And I think, as everyone agrees, we all should be
    forward-looking and looking to see how we can use technology,
    harness technology to deliver more effectively to those who
    need it most.
        As we sit here today, as we talk about the stimulus that
    needs to be delivered today, however, what is clear is that we
    are going to have to harness the infrastructure that is there
    today and that is actually working. Prepaid cards, as you
    referenced, actually work well and consumers like them, so
    getting them in the hands of those consumers.
        There is no broadband issue with a prepaid card. That is
    something that we can deploy now, and we are, that works well
    and can be transitioned, candidly, to the technology, including
    P2P mobile wallets. You can load your prepaid card onto them as
    we evolve. We can harness those technologies as well.
        And I just want to make the point that those also work well
    in rural areas, in some of the areas that we talked about,
    because not only is fintech stepping in, but it is leveraging
    the existing infrastructure in terms of independent ATMs, which
    are prevalent in those areas, but also big box stores, and
    other grocery stores, which are also now participating in the
    system, helping consumers get cash onto these technologies or
    get cash off where they need it.
        Ms. Tlaib. Thank you so much.
        I yield back, Mr. Chairman.
        Chairman Lynch. The gentlewoman yields back.
        And that concludes our questioning, I believe. If any
    Member is out there and I have not called upon them, let me
    know. But I would like to take this opportunity to thank all of
    our witnesses for their thoughtful and enlightening testimony.
        Without objection, the following letters have also been
    entered into the record and will be admitted after today's
    hearing: the American Bankers Association, eCurrency,
    Cardtronics, the Credit Union National Association, the
    Innovative Payments Association, and Professor Tony Yezer of
    George Washington University.
        The Chair notes that some Members may have additional
    questions for this panel, which they may wish to submit in
    writing. Without objection, the hearing record will remain open
    for 5 legislative days for Members to submit written questions
    to these witnesses and to place their responses in the record.
    Also, without objection, Members will have 5 legislative days
    to submit extraneous materials to the Chair for inclusion in
    the record.
    This hearing is now adjourned. Thank you. Be safe.
    [Whereupon, at 1:34 p.m., the hearing was
    adjourned]

                       A P P E N D I X

                       June  11,  2020

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