[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]






 
                 THE ANNUAL TESTIMONY OF THE SECRETARY

                  OF THE TREASURY ON THE STATE OF THE

                     INTERNATIONAL FINANCIAL SYSTEM

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

                             HYBRID HEARING

                               BEFORE THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             APRIL 6, 2022

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 117-78
                           
                           
                           
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]     




                          ______                       


             U.S. GOVERNMENT PUBLISHING OFFICE 
47-477PDF           WASHINGTON : 2022 
 
                           
                           

                 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             FRANK D. LUCAS, Oklahoma
GREGORY W. MEEKS, New York           BILL POSEY, Florida
DAVID SCOTT, Georgia                 BLAINE LUETKEMEYER, Missouri
AL GREEN, Texas                      BILL HUIZENGA, Michigan
EMANUEL CLEAVER, Missouri            ANN WAGNER, Missouri
ED PERLMUTTER, Colorado              ANDY BARR, Kentucky
JIM A. HIMES, Connecticut            ROGER WILLIAMS, Texas
BILL FOSTER, Illinois                FRENCH HILL, Arkansas
JOYCE BEATTY, Ohio                   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
CINDY AXNE, Iowa                     DAVID KUSTOFF, Tennessee
SEAN CASTEN, Illinois                TREY HOLLINGSWORTH, Indiana
AYANNA PRESSLEY, Massachusetts       ANTHONY GONZALEZ, Ohio
RITCHIE TORRES, New York             JOHN ROSE, Tennessee
STEPHEN F. LYNCH, Massachusetts      BRYAN STEIL, Wisconsin
ALMA ADAMS, North Carolina           LANCE GOODEN, Texas
RASHIDA TLAIB, Michigan              WILLIAM TIMMONS, South Carolina
MADELEINE DEAN, Pennsylvania         VAN TAYLOR, Texas
ALEXANDRIA OCASIO-CORTEZ, New York   PETE SESSIONS, Texas
JESUS ``CHUY'' GARCIA, Illinois
SYLVIA GARCIA, Texas
NIKEMA WILLIAMS, Georgia
JAKE AUCHINCLOSS, Massachusetts

                   Charla Ouertatani, Staff Director
                   
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    April 6, 2022................................................     1
Appendix:
    April 6, 2022................................................    49

                               WITNESSES
                        Wednesday, April 6, 2022

Yellen, Hon. Janet L., Secretary, U.S. Department of the Treasury     4

                                APPENDIX

Prepared statements:
    Yellen, Hon. Janet L.........................................    50

              Additional Material Submitted for the Record

Maloney, Hon. Carolyn:
    Written statement of American Citizens Abroad................    54
Yellen, Hon. Janet L.:
    Written responses to questions for the record from 
      Representative Auchincloss.................................    61
    Written responses to questions for the record from 
      Representative Emmer.......................................    91
    Written responses to questions for the record from 
      Representative Foster......................................    57
    Written responses to questions for the record from 
      Representative Hill........................................    89
    Written responses to questions for the record from 
      Representative Huizenga....................................    87
    Written responses to questions for the record from 
      Representative McHenry.....................................    63
    Written responses to questions for the record from 
      Representative Nikema Williams.............................    59


                        THE ANNUAL TESTIMONY OF

                          THE SECRETARY OF THE

                         TREASURY ON THE STATE

                          OF THE INTERNATIONAL

                            FINANCIAL SYSTEM

                              ----------                              


                        Wednesday, April 6, 2022

             U.S. House of Representatives,
                   Committee on Financial Services,
                                                   Washington, D.C.
    The committee met, pursuant to notice, at 10:04 a.m., in 
room 2128, Rayburn House Office Building, Hon. Maxine Waters 
[chairwoman of the committee] presiding.
    Members present: Representatives Waters, Maloney, 
Velazquez, Sherman, Scott, Green, Cleaver, Perlmutter, Himes, 
Foster, Beatty, Vargas, Gottheimer, Gonzalez of Texas, Lawson, 
Axne, Casten, Pressley, Lynch, Adams, Tlaib, Dean, Garcia of 
Illinois, Garcia of Texas, Williams of Georgia, Auchincloss; 
McHenry, Lucas, Posey, Luetkemeyer, Huizenga, Wagner, Barr, 
Williams of Texas, Hill, Emmer, Zeldin, Loudermilk, Mooney, 
Davidson, Budd, Kustoff, Gonzalez of Ohio, Rose, Steil, and 
Sessions,
    Chairwoman Waters. The Financial Services Committee will 
come to order.
    Without objection, the Chair is authorized to declare a 
recess of the committee at any time.
    I intend to conclude today's hearing at approximately 1:00, 
so that means everybody is going to be kept to the exact time 
that they are allotted: 5 minutes.
    Today's hearing is entitled, ``The Annual Testimony of the 
Secretary of the Treasury on the State of the International 
Financial System.''
    I now recognize myself for 4 minutes to give an opening 
statement.
    I would like to welcome Treasury Secretary Janet Yellen, 
who today is presenting testimony for the first time on the 
state of the international financial system. This is a very 
timely hearing given that it is the international financial 
system established by the United States and its allies after 
World War II that enables the West to hit the Russian economy 
with unprecedented force in response to the travesty and 
brutality of Putin's war against Ukraine. The most powerful 
sanctions to date have blocked Russia's largest financial 
institution and its central bank from the global financial 
system. I commend President Biden and Secretary Yellen for 
their leadership in coordinating these efforts with our allies 
and their support of these efforts.
    I recently sent a letter to the trade associations 
representing our nation's financial institutions, asking them 
to report how U.S. businesses are doing their part to exit 
Russia and block funding for Putin's war crimes, so I look 
forward to their fulsome responses. The unity of our allies in 
helping Ukraine did not occur by accident. In fact, this unity 
is a direct result of the Biden Administration's efforts to 
renew the U.S. commitment to global economic cooperation. 
President Biden signaled this commitment last year with his 
first budget proposal, which boosted U.S. contributions to the 
Multilateral Development Banks (MDBs), global climate finance 
efforts, and food insecurity programs by 73 percent. This was 
followed by Secretary Yellen's support for a new allocation of 
Special Drawing Rights at the International Monetary Fund, 
which provided a $275 billion liquidity boost to emerging 
economies to help them respond to the global pandemic.
    There will also be a new test of the strength of the 
international financial system and its international financial 
institutions, which will center on the ability and willingness 
of western nations to adequately respond to the humanitarian, 
energy security, and food insecurity crisis caused by the war 
in Ukraine. But our work is not done. This committee recently 
marked up legislation to further isolate Russia and support 
Ukraine, including my bill, the Nowhere to Hide Oligarchs' 
Asset Act, that assists the Financial Crimes Enforcement 
Network (FinCEN) in identifying the yachts, the luxury 
apartments, and other assets of Putin's cronies, and we will 
continue to keep the pressure on Putin.
    Additionally, my committee intends to pay close attention 
to the challenges faced in the Caribbean, including a lack of 
access to international banking services. So, I want to see a 
concerted effort by international financial institutions to 
focus on the Caribbean and show the world that development is 
possible even under the most challenging circumstances. 
Secretary Yellen, I look forward to your testimony.
    I now recognize the ranking member of the committee, the 
gentleman from North Carolina, Mr. McHenry, for 4 minutes.
    Mr. McHenry. Thank you, Madam Chairwoman, and thank you, 
Secretary Yellen, for appearing before the committee. It has 
been a long time coming. I know Democrats control the House, 
the Senate, and the White House. But our expectation is that 
the Treasury Secretary will comply with the law and appear 
before our committee and other committees, as the law dictates. 
So we are grateful you're here, but this is long overdue, 
especially considering the Russia-Ukraine conflict. And also, 
we note on Capitol Hill that the Chinese government is taking 
notes, especially on the U.S. response in this conflict.
    The Biden Administration sanctions have helped isolate the 
Russian economy. That is good, but it was reactive at best. We 
watched as Russia amassed troops at the border last fall, all 
the while claiming no plans for invasion, a claim parroted by 
Chinese officials as late as February 23rd. And at the same 
time that all of this is happening with Russia and Ukraine, we 
see China's continued activities in the Taiwan Strait, and they 
are telling us that supporting Taiwan is, ``dangerous to our 
relationship.'' We must remain clear-eyed about whom we're 
dealing with here. China must feel the pinch of its no-limit 
partnership with Russia. While the Biden Administration 
eventually sanctioned Russia, it also unwittingly provided a 
means by which China could help Russia circumvent those 
sanctions.
    Let me explain. Last year, the Treasury Department bypassed 
Congress and approved a general allocation of International 
Monetary Fund Special Drawing Rights (SDRs), sending Russia and 
Belarus more than $18 billion, de facto $18 billion in no-
strings-attached liquidity. State sponsors of terrorism, like 
Iran and Syria, received billions more, by the way. Republicans 
warned that an SDR allocation ran counter to U.S. sanctions 
policy. As the Putin regime continues its assault on Ukraine, 
it is clear that our concerns were justified. And yet, even the 
Office of Foreign Assets Control (OFAC) seeks to block Russia's 
access to foreign reserves, at the same time our country 
allowed SDRs to become a lifeline that the Russians may 
exchange for Chinese currency, for the Chinese RMB.
    Now, U.S. officials have to ask foreign countries not to 
redeem the very same Russia SDRs this Administration pushed for 
just a few months ago. This policy doesn't make any sense. That 
was a bad decision. And I think it is important that the public 
recognize and this Administration recognize that Congress is a 
partner in this fight, this international fight that we have. 
It is the Treasury Department that has a duty to keep us 
informed. To date, we have yet to receive certain reports 
related to the international financial institutions under 
[inaudible]. This includes policies regarding China, Taiwan, 
and efforts against terrorism financing generally.
    I appreciate Treasury's work in terrorism and financial 
intelligence. It is good work, but here, too, Treasury must 
respect oversight of Congress, and it is simply unacceptable 
that Treasury officials have dodged public hearings for as long 
as they have. We have to work to ensure that we have maximum 
pressure on Moscow so that the Putin regime changes course in 
Ukraine. But at the same time, we cannot take our eyes off the 
challenge that China poses and the risks that a rising China 
poses to the stability of the world.
    So, Secretary Yellen, thank you for being here, and with 
that, Madam Chairwoman, I yield back.
    Chairwoman Waters. Thank you very much, Ranking Member 
McHenry.
    I now recognize the gentleman from Connecticut, Mr. Himes, 
for 1 minute.
    Mr. Himes. Thank you, Madam Chairwoman, and Madam 
Secretary. I have been in dozens of these hearings with at 
least four Secretaries of the Treasury, but I can't remember a 
hearing in which cooperation and unified action were more 
necessary. As we speak, Russian troops are raping women, they 
are murdering military-aged men, and they are targeting 
children in Ukraine. I don't think anyone in this room will 
ever forget the images that we saw of Russian barbarism in 
Bucha.
    So, our mission is clear. Democrats and Republicans, 
Legislative and Executive Branches, we must do all we can to 
help Ukraine win this war. We must show the Russian people that 
the nation of Tolstoy and Tchaikovsky will be completely 
isolated with a stone-age economy as long as they are governed 
by a butcher. And whether it takes 1 year or 10, Vladimir Putin 
must answer to the laws and the standards of decency that he 
mocks. So, I have just one question today, which is, what more 
can we do to help the people of Ukraine and the survival of our 
democracy?
    Chairwoman Waters. I now recognize the gentleman from 
Kentucky, Mr. Barr, for 1 minute.
    Mr. Barr. Secretary Yellen, thanks for being back with us, 
and I just want to compliment my friend from Connecticut, Mr. 
Himes. I couldn't say it better myself. I will say one thing we 
could do more is to sanction the energy-related transactions, 
which we are not doing.
    Russia's war on Ukraine highlights the important role of 
the Office of Foreign Assets Control (OFAC) within Treasury to 
put economic pressure on Putin and the Russian military. U.S. 
sanctions, coordinated with our allies, have had some effect, 
but we can do more. As I said, the atrocities on display, 
especially in recent days, necessitate that the U.S. use its 
full sanctions power, including comprehensively limiting 
Russia's ability to profit from oil and gas sales. We are not 
sanctioning energy-related transactions. We need to do so now.
    The International Monetary Fund (IMF) is also at a 
crossroads. The IMF plays an important role in promoting 
international macroeconomic stability, yet scandals at the top 
of the organization and its mission creep into issues like 
climate change create a lack of confidence in its leadership. 
This hearing will focus on Treasury's representation of U.S. 
interests at international financial institutions (IFIs), and I 
look forward to today's testimony.
    Chairwoman Waters. Thank you very much. I want to welcome 
the Honorable Janet Yellen, Secretary of the United States 
Department of the Treasury.
    You will have 5 minutes to summarize your testimony. You 
should be able to see a timer that will indicate how much time 
you have left for your testimony.
    And without objection, your written statement will be made 
a part of the record.
    Secretary Yellen, you are now recognized for 5 minutes to 
present your testimony.

  STATEMENT OF THE HONORABLE JANET L. YELLEN, SECRETARY, U.S. 
                   DEPARTMENT OF THE TREASURY

    Secretary Yellen. Thank you, Chairwoman Waters, Ranking 
Member McHenry, and members of the committee. Thank you for 
giving me the opportunity to speak to you today. I am here to 
discuss Treasury's oversight of the international financial 
institutions, or IFIs, and our role in promoting inclusive and 
sustainable growth, and global monetary and financial stability 
and development.
    Over the last 2 years, the IFIs have led the way in helping 
low-income and developing countries fight the COVID-19 
pandemic. Since the beginning of the crisis, the IMF has 
approved nearly $175 billion in emergency lending, concessional 
financing, debt service relief, and precautionary support to 
fund pandemic response and economic recovery efforts. The 
Multilateral Development Banks, or MDBs, approved nearly $130 
billion over the same period to address the health, economic, 
and social impacts of the pandemic. Treasury has pressed the 
World Bank to work with international partners to improve 
vaccine readiness and support increased vaccine delivery in 
developing countries. As long as this pandemic is raging 
anywhere in the world, the American people will be vulnerable 
to new variants.
    The importance of the IFIs is even more paramount given 
Russia's brutal and unprovoked invasion of Ukraine. Russia's 
actions, including the atrocities committed against the 
innocent Ukrainians in Bucha, are reprehensible, represent an 
unacceptable affront to the rules-based global order, and will 
have enormous economic repercussions in Ukraine and beyond. 
Treasury is committed to holding Russia accountable for its 
actions so it cannot benefit from the international financial 
system. President Biden has rallied over 30 countries, 
representing well over half the world's economy, to impose 
swift, severe sanctions and export controls on Russia.
    Treasury is also working with our partners to block Russia 
from accessing benefits from the international financial 
institutions. Both the World Bank and the European Bank for 
Reconstruction and Development (EBRD) have ceased approving new 
financing for Russia since the unlawful annexation of Crimea in 
2014. Since the invasion, these institutions have announced 
further measures to prevent Russia's and Belarus' access to 
financial and non-financial assistance. Since the start of the 
war, rapid IMF and World Bank assistance has allowed Ukraine 
fiscal space to pay salaries for civilians, soldiers, doctors, 
and nurses, while also meeting its external debt obligations. 
The IMF, the World Bank, and the EBRD will be critical partners 
in rebuilding Ukraine, and they will also provide vital support 
to neighboring countries welcoming refugees.
    Spillovers from the crisis are heightening economic 
vulnerabilities in many countries that are already facing 
higher debt burdens and limited policy options as they recover 
from COVID-19. The IFIs will play a critical role in several 
areas.
    First, food security. Together, Russia and Ukraine account 
for nearly a third of the world's wheat exports. Russia's 
invasion disrupted the flow of food for millions of people 
around the world and caused prices to spike. The IFIs and food 
security funds are already working to address both the short-
term and long-term effects of the invasion on global food 
prices and supplies.
    Second, energy security. The invasion of Ukraine has also 
underscored the need for sustainable, affordable, clean, and 
secure energy for economic growth and security for the United 
States, as well as for governments that partner with the IFIs. 
The MDBs' promotion of energy efficiency and capital investment 
to diverse energy sources like solar, wind, and other non-
fossil, fuel-based energy sources, and away from suppliers, 
such as Russia, strengthens energy security and reduces short-
term fossil fuel price risks, all while addressing the long-
term threat of climate change.
    Public finance alone cannot meet this challenge. Treasury 
is encouraging the MDBs to undertake reforms and adopt more 
ambitious targets for mobilizing private capital, particularly 
through their private-sector windows. Many low-income countries 
are facing growing debt burdens as the pandemic continues into 
a 3rd year. The IFI supported the G20's Debt Service Suspension 
Initiative from 2020 to 2021, which helped eligible countries 
free up resources to use toward pandemic support. The IMF and 
the World Bank are now supporting the common framework for debt 
treatments, which seeks to help low-income countries address 
their longer-term debt-related vulnerabilities.
    The recent record replenishment of the World Bank's 
concessional window, the International Development Association 
(IDA), will help deliver critical financing to the world's 
poorest and most vulnerable to address these impacts at a 
moment of urgent need.
    Finally, the Biden Administration is seeking congressional 
authorization to provide financing to bolster the Poverty 
Reduction and Growth Trust (PRGT), the IMF's existing 
concessional facility, and the new IMF Resilience and 
Sustainability Trust (RST). The PRGT has been stretched by the 
exceptional amount of COVID-19 financing provided and needs 
additional funding. The new RST will provide targeted financing 
alongside IMF programs to support countries' efforts to 
strengthen energy security and pandemic preparedness.
    I look forward to working with you to continue to advance 
U.S. economic leadership abroad and to create opportunities for 
Americans at home. I am happy to answer your questions.
    [The prepared statement of Secretary Yellen can be found on 
page 50 of the appendix.]
    Chairwoman Waters. Thank you very much.
    I now recognize myself for 5 minutes for questions.
    While you will probably get a lot of questions today about 
Ukraine, this is an international financial architecture that 
we're looking at. And for years, I have been concerned about 
how our Caribbean neighbors are treated in the international 
community by U.S. financial institutions and by our own 
government. In particular, I am concerned that, as a result of 
U.S. Government actions and overly-cautious U.S. banks, 
countries like Barbados, the Bahamas, Jamaica, and others have 
been cut off from access to capital and credit de-risking, as 
this issue is called, as direct and negative effects on the 
ability of the Caribbean to build businesses, employ citizens, 
facilitate economic development, and allow families to send and 
receive funds from abroad. De-risking has consequences for the 
United States as well.
    The Caribbean region is both geographically and 
historically close to the United States, and it is not only an 
important trading partner, but also a strong, reliable ally in 
security cooperation. That is why this committee passed 
legislation which was signed into law through the Anti-Money 
Laundering Act of 2020, that directs the Treasury to lead a 
government-wide strategy on de-risking and provide that 
strategy to Congress later this year.
    Madam Secretary, can you speak to the importance of the 
Caribbean region to the United States and what the Treasury is 
doing to address de-risking, including Treasury's progress on 
the strategy?
    Secretary Yellen. Thank you for that question, Chairwoman 
Waters. Financial inclusion, of course, is a very important 
goal of the United States and the Treasury Department, and 
we've been concerned about de-risking in the Caribbean and 
other areas of the world. I would say that, in spite of that, 
the United States has one of the lowest costs of sending 
remittances of any country in the world, and we have seen 
remittances increase considerably. The data that we have on the 
Caribbean shows that there has been a significant increase in 
remittances there, and into Latin America more generally.
    There are diverse drivers of de-risking. One issue is 
profitability concerns of banks that have led them to cut back, 
and also, changes in global business strategy following the 
2009-2010 financial crisis. Our Anti-Money Laundering/Combating 
the Financing of Terrorism (AML/CFT) rules may be a further 
contributor to de-risking, and to the extent that is true, we 
think the best way forward is for jurisdictions to make 
meaningful and publicly-visible improvements to their AML/CFT 
regimes. That is something which will give foreign financial 
institutions confidence that they are operating in an 
environment in which they can mitigate the risks effectively, 
and Treasury is happy to engage in dialogues and provide 
support to jurisdictions that are seeking to make those 
changes.
    Chairwoman Waters. Thank you. In the interest of time, I 
yield back.
    The gentleman from North Carolina, Mr. McHenry, who is the 
ranking member of the committee, is now recognized for 5 
minutes.
    Mr. McHenry. Secretary Yellen, thank you for being here. As 
we know, Russia is still earning hundreds of millions of 
dollars each day in hard currency through its oil and gas 
exports. Even though the President banned Russian oil imports, 
which I welcome, Treasury continues to provide sanctions 
licensing for banks transacting and transactions related to 
Russian energy. This includes financial services allowing other 
countries to import Russian oil and gas. Why are these licenses 
being provided?
    Secretary Yellen. We are working very closely with our 
partners to have a coordinated set of sanctions, and our goal 
from the outset has been to impose maximum pain on Russia, 
while, to the best of our ability, shielding the United States 
and our partners from undue economic harm.
    Mr. McHenry. I have publicly commended the Administration's 
approach on sanctions. What I am particularly asking about are 
the licenses permitting bank transactions related to Russian 
energy.
    Secretary Yellen. In following up on what I just indicated, 
unfortunately, many of our European partners remain heavily 
dependent on Russian natural gas, as well as oil, and they are 
committed to making the transition away from that dependence as 
quickly as possible. We are doing all we can to help. But in 
the meantime, we issued this license, and they have taken steps 
to make sure that there can be a continued flow of Russian 
natural gas and oil.
    Mr. McHenry. And if the Europeans take stronger action 
against Russian energy, your Department would take stronger 
action as well?
    Secretary Yellen. We are working closely with them on 
sanctions and want to remain aligned with them.
    Mr. McHenry. I want to pivot to China, because I think the 
government of China is watching us very closely. It is pretty 
clear that when Russian troops amassed in the Eastern Ukraine 
border last fall, the Administration lacked a cohesive strategy 
to respond. Many of us have warned that a similar situation is 
occurring between China and Taiwan. Now, for example, Chairman 
Xi has vowed to, ``smash,'' any attempts at independence by 
Taiwan. We have seen an unprecedented incursion by the Chinese 
into Taiwanese airspace, including sending dozens of planes 
into Taiwan's air defense identification zone. Has the 
Administration issued a warning of sanctions or a threat of 
sanctions to Beijing to deter military action by China against 
Taiwan?
    Secretary Yellen. Clearly, the Administration and the 
Treasury Department are opposed to any unilateral change in the 
status quo with respect to Taiwan, and we are working very 
closely with our partners and the Administration to make sure 
that we have tools at our disposal to respond to provocations 
in that regard. I am not going to come in on hypotheticals in 
what we would do in any particular scenario, but I will assure 
you that we are closely coordinating with all of our 
interagency partners to make sure that we will be able to 
respond appropriately.
    Mr. McHenry. Has the Administration contemplated a sanction 
strategy in the event of a Chinese move against Taiwan?
    Secretary Yellen. I am not going to comment on specifics. 
We have put sanctions in place on China with respect to forced 
labor and Xinjiang and provocations with Hong Kong, but 
certainly, we are concerned about Taiwan and will act as 
appropriate.
    Mr. McHenry. And that would include sanctioning senior 
leaders of the Chinese government, as has been done with Russia 
and Russian oligarchs? Are you open to all tools available in 
the event that China moves aggressively towards Taiwan?
    Secretary Yellen. Absolutely. I believe we have shown that 
we can. In the case of Russia, we have threatened significant 
consequences. We have imposed significant consequences, and I 
think that you should not doubt our ability and resolve to do 
the same in other situations.
    Mr. McHenry. Thank you.
    Chairwoman Waters. Thank you very much. The gentlewoman 
from New York, Ms. Velazquez, who is also the Chair of the 
House Committee on Small Business, is now recognized for 5 
minutes.
    Ms. Velazquez. Thank you, Madam Chairwoman. Secretary 
Yellen, many of us on this committee are concerned about the 
potential use of cryptocurrencies and other digital assets to 
evade international sanctions imposed on Russia for its illegal 
invasion of Ukraine. The U.S. and other G7 nations recently 
pledged to work together to ensure that the Russian state, its 
elites, and oligarchs will not be able to utilize digital 
assets to sidestep these sanctions. How is the Treasury 
Department working to carry out this pledge?
    Secretary Yellen. We are concerned about sanctions 
avoidance, and we recognize that digital assets present 
opportunities for doing exactly that. So, first, I would say 
that we are monitoring for any attempts to use cryptocurrency 
to evade our sanctions and we have ample enforcement authority 
which we won't hesitate to use. We are carefully tracking, 
using all of the tools at our disposal, the assets of oligarchs 
and other sanctioned individuals. We are working very closely, 
and exchanging information on this with our partners in the 
Russian Elites, Proxies, and Oligarchs (REPO) Task Force. The 
Department of Justice announced a new task force called 
KleptoCapture, which is designed to use U.S. law enforcement 
resources to identify and prosecute sanctions evasion, and 
FinCEN issued an alert to financial institutions to help them 
recognize suspicious transactions in this regard.
    Ms. Velazquez. Thank you for that answer. Secretary Yellen, 
I want to commend the Treasury Department on yesterday's 
announcement sanctioning the virtual currency exchanges, 
Garantex and Hydra, Russia's most prominent darknet market. On 
the one hand, I think this announcement demonstrates the 
concern I have about how the dark web and cryptocurrencies can 
be utilized for illicit and criminal behavior, and that cyber 
criminals operating in Russia often operate with the support of 
Vladimir Putin and his regime, but, more importantly, it sends 
a message to Putin and cybercriminals around the world that the 
United States, in coordination with its allies, will continue 
to disrupt this network and cut of all avenues for potential 
sanctions evasion by Russia.
    Secretary Yellen, one of the many tragedies of Russia's 
illegal invasion of Ukraine is the refugee crisis it has 
created. The United Nations estimates that 500,000 Ukrainians 
have already fled, and early estimates suggest that refugee 
totals could reach up to 4 million. Support for Ukrainian 
refugees could cause hosting countries as much as $30 billion 
over the next year, according to some estimates. How is the 
Treasury Department working to assess and possibly alleviate 
the economic and financial impact the refugee crisis is having 
in other countries in the region?
    Secretary Yellen. Thank you for that. We are very concerned 
about the refugee crisis. We are monitoring this situation very 
carefully and recognize the enormous burden that it is going to 
place on host governments that are already struggling with 
other stresses because of the pandemic and their proximity to 
the conflict.
    We are working with other agencies and also with 
international partners to support the host governments and the 
refugees themselves, and there will be a variety of channels, 
bilateral support, multilateral support. We are working with 
the international financial institutions and, as an example, 
the European Bank for Reconstruction and Development recently 
announced a 2 billion euro package to support Ukraine and other 
afflicted countries, but this will be a high priority for us.
    Ms. Velazquez. Thank you. I yield back.
    Chairwoman Waters. Thank you very much. The gentlewoman 
from Missouri, Mrs. Wagner is now recognized for 5 minutes.
    Mrs. Wagner. Thank you, Madam Chairwoman, and Secretary 
Yellen, thank you for joining us today. Last month, I 
introduced the Isolate Russian Government Officials Act to 
ensure that Russia becomes a pariah in certain international 
organizations. I was very pleased to see the committee pass 
this legislation unanimously in March. Could you please reply 
with a simple yes or no, unless you feel the need to elaborate, 
regarding Russia's involvement with the following groups that 
are within Treasury's jurisdiction? Secretary Yellen, should 
Russia be removed from the G20?
    Secretary Yellen. President Biden has made it clear, and I 
certainly agree with him, that it cannot be business as usual 
for Russia in any of the financial institutions. He has asked 
that Russia be removed from the G20, and I have made clear to 
my colleagues in Indonesia that we will not be participating in 
a number of meetings if the Russians are there--
    Mrs. Wagner. And I am going to go down a few others, 
because this is all codified now in my legislation that I hope 
will make it to the House Floor. So, I am pleased to hear you 
are echoing the position of the Administration and certainly of 
this legislation vis-a-vis the G20. Should Russia be removed 
from the Financial Action Task Force (FATF)?
    Secretary Yellen. That is one that I haven't looked into. I 
will get back to you on that one, but its role certainly should 
be minimal.
    Mrs. Wagner. Please do, as it is, again, part of this 
legislation.
    The media reported last month that Russia had, ``stepped 
back,'' from participating in the Financial Stability Board 
(FSB), but it is still listed as a member. Should Russia be 
removed from the FSB?
    Secretary Yellen. Certainly, its role should be minimal.
    Mrs. Wagner. I would hope it would be removed from the FSB, 
and this is what the legislation does. It passed unanimously 
out of committee. I would hope that the Administration, and I 
believe that it has indicated such--
    Secretary Yellen. These are not unilateral decisions of the 
United States, and each one of these organizations has its own 
set of members--
    Mrs. Wagner. We need to make a strong stance ourselves as 
leaders in these organizations.
    Secretary Yellen. We have made clear that we do not want 
Russia to participate actively in these organizations.
    Mrs. Wagner. So, that would be the FSB. Later this month, 
the IMF and the World Bank will hold their spring meetings. 
Will Russia be represented at those meetings, even virtually, 
and will you urge participants to refuse to interact with 
Russian officials?
    Secretary Yellen. Russia is a member of the IMF. And in 
spite of the fact that the great majority of IMF members, I 
think, agree that Russia's actions are horrific, it doesn't 
look like it would be possible, given the rules, to remove 
Russia's--
    Mrs. Wagner. I understand that, but what I am saying is the 
U.S. must lead and be strong in our resolve on the sanctions 
and in making them the pariah in these organizations. I hope 
that you would urge participants to refuse interacting with 
Russian officials vis-a-vis the IMF and the World Bank.
    Secretary Yellen. We will denounce Russia's actions in all 
four of those.
    Mrs. Wagner. Thank you very, very much. Moving on to China, 
as you know, China has faced major challenges in its real 
estate sector, including debt problems at one of its largest 
developers, Evergrande. China's opaque lending abroad creates 
contingent liabilities of unknown size, and Chinese regulators 
have warned about a rise in non-performing loans. Beijing has 
also announced restrictions on private investment in news 
media, which would only tighten the Chinese Communist Party's 
control over information and make China's economy more opaque.
    In your view, Madam Secretary, which parts of the Chinese 
financial system poses the greatest risk to stability beyond 
China's borders, and what is Treasury doing on the FSOC, the 
FSB, and elsewhere, to mitigate this risk?
    Secretary Yellen. I do think that there are significant 
risks in the Chinese financial system, and the property sector 
is an example of one where there is severe risks. And 
importantly, a slowdown in the property sector beyond its 
global implications would probably weigh on China's growth 
outlook, which would have impacts on its economic partners. 
This is something we are carefully monitoring.
    Mrs. Wagner. If you have information on that, I would 
appreciate it in writing. We can follow up.
    I yield back.
    Chairwoman Waters. Thank you. The gentleman from Georgia, 
Mr. Scott, who is also the Chair of the House Agriculture 
Committee, is now recognized for 5 minutes.
    Mr. Scott. Thank you, Madam Chairwoman. Secretary Yellen, 
you and the Treasury Department have refused to sanction 
Russian oligarch, Alisher Usmanov, who is worth $20 billion and 
who is also Vladimir Putin's favorite oligarch, and I want to 
know why. Why would the U.S. Treasury Department issue a 
special license exempting this oligarch and making it legal for 
his entities to continue doing business as usual with our 
American companies when Putin is murdering children, bombing 
hospitals, raping children, raping women? Why?
    Secretary Yellen. We have sanctioned a large number of 
Russian--
    Mr. Scott. No, but my question is this. There has to be a 
reason. We need to get answers to this. The international world 
is wondering why, and there has to be a reason, with the 
terrible deeds, the crimes that this Administration is taking, 
and here you have Putin's favorite oligarch worth $20 billion 
being exempted and given the right to continue doing business. 
Answer me, please. The world wants to know.
    Secretary Yellen. I can't give you the details on a 
specific individual, but I can tell you that every day we 
continue to impose additional sanctions. This morning, we 
announced, just 15 minutes ago, a further set of sanctions, 
including on Putin's children. And sometimes beyond blocking an 
individual, when an individual owns companies, has an interest 
in companies, it is important--
    Mr. Scott. Let me ask you this. My time is marching on. 
Tell me about your Office of Foreign Assets Control. What role 
did they play in this decision?
    Secretary Yellen. They play an important role in preparing 
sanctions, acting against individuals--
    Mr. Scott. Secretary Yellen, this is serious here. This is 
becoming a black mark on our nation. We need an answer as to 
why. You may have a legitimate one. If it is the Office of 
Foreign Assets Control, we need to know if it had some 
desperate situation such that to do otherwise would impact our 
own nation or our security. Why?
    Secretary Yellen. We work very closely with the State 
Department and the National Security Council in deciding on 
sanctions packages--
    Mr. Scott. Was there any internal disagreement within the 
Treasury Department's Office of Foreign Assets Control about 
how certain oligarchs would be protected from the deep economic 
impact on these sanctions, why Putin's number-one oligarch gets 
a sense of false image of what we are doing? And let me tell 
you, our reputation as the world leader is at stake when these 
types of things are happening and there is no explanation for 
it. So, help us with that.
    Secretary Yellen. I am not going to offer comments on a 
specific individual that we haven't sanctioned.
    Mr. Scott. Have you refused to sanction other key 
oligarchs? Is there a pecking order?
    Secretary Yellen. We have imposed a large number of 
sanctions on Russian oligarchs and continue to impose further 
ones. We are not finished.
    Chairwoman Waters. The gentleman's time has expired.
    Madam Secretary, I would ask that you make arrangements 
with Mr. Scott. If it is classified, you may meet with him, or 
whomever you designate, but he needs an answer. Thank you.
    Mr. Scott. Thank you, Madam Chairwoman.
    Chairwoman Waters. The gentleman from Oklahoma, Mr. Lucas, 
is now recognized for 5 minutes.
    Mr. Lucas. Thank you, Madam Chairwoman. Secretary Yellen, I 
would like to discuss with you today a significant concern for 
me. The U.S. economy is facing significant challenges coming 
off the heels of a global pandemic of which we are still 
studying the effects. The U.S. economy is also experiencing 
supply chain backlogs and inflation at a 40-year high, and the 
Russian invasion of Ukraine exacerbates economic uncertainty. 
In Oklahoma, small businesses, farmers, and ranchers are 
navigating surging gas prices and volatile agricultural markets 
for inputs like grain and fertilizer. In these uncertain times, 
investors seek to protect their retirement savings, to hedge 
risk, and of course, to safeguard their businesses.
    As I am sure you can appreciate, providing liquid markets 
to protect the U.S. economy in the face of substantial 
headwinds should be a priority. Unfortunately, I am concerned 
that the volume and significance of rulemaking proposals coming 
out of the Securities and Exchange Commission in such a short 
amount of time runs counter to this goal. Since November, the 
SEC has proposed over 20 new major, far-reaching rule changes. 
These rules impact every asset class under the SEC's 
jurisdiction. The sheer amount and complexity of these 
rulemakings, compounded with the short and simultaneous comment 
periods, and I note that short and in, many cases, simultaneous 
comment periods, could negatively impact markets and the public 
that depends on them. It is important for Congress to be able 
to fully understand the impact and potential unintended 
consequences of the SEC's sweeping new proposals.
    Here is my question, Madam Secretary. Can you speak to the 
importance of market liquidity during times of massive economic 
uncertainty?
    Secretary Yellen. Certainly. Having liquid markets is 
extremely important to businesses and consumers to be able to 
engage in financial and hedging transactions that they count on 
to deal with risk. So, I certainly agree with the idea that it 
should be and is an important priority.
    Mr. Lucas. And I realize you are not on the SEC, but the 
current approach, I worry, could rattle markets by rolling out 
extensive proposals during a time when strong capital markets 
are just essential to our constituents' economic growth and 
national security.
    Second question, news reports suggest the Administration is 
preparing to impose a new round of sanctions on Russia 
following recent atrocities, including two of Russia's largest 
financial institutions. The European Union is also said to be 
preparing new sanctions. In your discussions with your 
international counterparts, could you speak to the urgency with 
which the EU plans to intensify Russian sanctions, particularly 
focusing on a ban on Russian coal, oil, and natural gas 
exports?
    Secretary Yellen. I think our partners are as outraged by 
the atrocities that are being committed in Russia as we are, 
and we are working very actively with them to impose new 
sanctions that will cause Russia significant pain. This 
morning, we announced our own sanctions package that will now 
fully block Russia's largest bank, Sberbank, from participating 
in the U.S. financial system, as well as their largest private 
bank, Alfa-Bank.
    The President will sign a new Executive Order, prohibiting 
new investment in Russia by all U.S. persons, and additional 
sanctions have been placed on elites in some state-owned 
enterprises. And Europe is also working at a rapid pace to 
announce additional sanctions. I am not going to try to tell 
you exactly what they are, but they certainly intend to add to 
the sanctions they have in place.
    Mr. Lucas. Absolutely, Madam Secretary, but you don't see a 
reluctance on their part to target Russian energy exports, do 
you, or a change in that reluctance?
    Secretary Yellen. They recognize clearly the importance of 
depriving Russia of export revenue to the maximum extent that 
they possibly can, but regrettably have a dependence on oil and 
natural gas. So, there are tradeoffs there that they are trying 
to manage as best they can.
    Mr. Lucas. With that, Madam Chairwoman, I yield back the 
balance of my time.
    Chairwoman Waters. Thank you. The gentleman from Texas, Mr. 
Green, who is also the Chair of our Subcommittee on Oversight 
and Investigations, is now recognized for 5 minutes.
    Mr. Green. Thank you, Madam Chairwoman. And, Madam 
Secretary, thank you very much for all of the many things that 
you are trying to accomplish and the good things that you have 
done. I also want to acknowledge the leadership of the 
President, Madam Secretary. He has, in my opinion, brought the 
world together for the most part to take on the invasion of 
Ukraine, and I think that is a significant accomplishment. I 
still have faith in the President, and I compliment him for his 
ability to not only pull people together, but to try to 
maintain this coalition, so that if this becomes a long-term 
endeavor, we will still have allies with us. I think that is 
important.
    Madam Secretary, I have a copy of your statement for the 
record, which indicates, ``As long as the pandemic is raging 
anywhere in the world, the American people will still be 
vulnerable to new variants.'' I believe this to be a truthful 
statement and correct. As you know, Hong Kong is having some 
concerns with the virus that are causing great lockdowns, with 
millions of people involved. And as you also know, the Senate 
had a deal for $10 billion. That $10 billion deal appears to be 
stalled.
    I see where you have encouraged the World Bank to continue 
working closely with COVAX and the international partners to 
improve vaccine readiness and to support increased vaccine 
delivery to developing countries. Have you weighed in with the 
Senate, Madam Secretary? This is pretty important for us to get 
this deal done. Would you kindly give a response?
    Secretary Yellen. My colleagues in the White House have 
definitely weighed in regarding the provision of additional 
funding to deal with a pandemic to be a critical priority and 
are very concerned that we lack the funds that we need to 
address COVID, and they are very focused on this and have 
weighed in fully on the importance of this legislation.
    Mr. Green. Just a follow-up. I do appreciate weighing in. 
This is not only about the United States. It is about the 
world. As you know, the deal is void of a monument for the rest 
of the world, just the United States, and now that is being 
held up.
    Secretary Yellen. Yes.
    Mr. Green. I think as we weigh in, and I am sure you are 
doing this, expand it to make sure we include the rest of the 
world. I appreciate the $10 billion deal, but your statement 
rings true. As long as the pandemic is raging anywhere in the 
world, the American people will still be vulnerable to new 
variants. That is important. Can you give me the criticality 
associated with not only having a deal for the United States 
but also the rest of the world?
    Secretary Yellen. We absolutely need additional funding to 
help the rest of the world deal with the pandemic as well. We 
are continuing to do everything that we can through the WHO, 
the World Bank, the task force that they have put together, and 
I think that is right.
    I would repeat the words that you quoted me as saying, that 
as long as the pandemic is raging in any part of the world, the 
United States is not safe. There will be new variants, and I 
think it is critically important. I would also like to add that 
we have requested funding or the ability to lend funds to the 
new Resilience and Sustainability Trust that the IMF is 
establishing. One of the purposes of that trust is to provide 
the resources for countries around the world, middle- and 
lower-income countries, to be prepared for the next pandemic. I 
wish we could feel that this will be our last, but we should 
have learned our lessons that the globe needs to be prepared. 
And I would ask again that Congress provide the authorization 
that we need to lend resources to the IMF to help them prepare 
the world for future pandemics.
    Mr. Green. Thank you, Madam Chairwoman. I yield back.
    Chairwoman Waters. Thank you. The gentleman from Florida, 
Mr. Posey, is now recognized for 5 minutes.
    Mr. Posey. Thank you, Chairwoman Waters. Secretary Yellen, 
do you believe cutting the deficit spending and borrowing from 
the Federal Reserve could make a significant contribution to 
reducing inflationary pressures?
    Secretary Yellen. I apologize. I didn't catch your 
question. Could you say it again?
    Mr. Posey. Certainly. Do you believe cutting the deficit 
spending and borrowing from the Federal Reserve could make a 
significant contribution of inflationary pressures?
    Secretary Yellen. What about the Federal Reserve? Something 
about the Federal Reserve, could you repeat that?
    Mr. Posey. Yes. Do you believe cutting deficit spending--
got it?
    Secretary Yellen. Cutting deficit spending?
    Chairwoman Waters. Mr. Posey, you need to speak into the 
microphone and speak up a little bit louder.
    Mr. Posey. Yes, I think I have it at 100 percent here. Let 
me try it again. Okay.
    Do you believe that cutting deficit spending and borrowing 
from the Federal Reserve could make a significant contribution 
to the reduction of inflationary pressures?
    Secretary Yellen. The Federal Reserve is charged with 
controlling inflation and is taking steps to address the 
inflationary situation here. And the Administration has just 
proposed a budget that has, over the next decade, a trillion 
dollars' worth of deficit reduction. So, I agree on the 
importance of controlling inflation, and the Federal Reserve, 
of course, is independent in making its judgments on what is 
appropriate but will take action to help bring inflation down.
    Mr. Posey. So, you do believe that cutting deficit spending 
and borrowing from the Federal Reserve could make a 
contribution to reducing inflationary pressures?
    Secretary Yellen. I think the Federal Reserve has a role to 
play in reducing inflationary pressures, yes.
    Mr. Posey. And you think that cutting deficit spending can 
help?
    Secretary Yellen. We have proposed to do so in the fiscal 
2023 budget that the Administration has just released.
    Mr. Posey. So, I take it as a yes then? The simple answer 
would be a yes?
    Secretary Yellen. Yes. And we do have a substantial 
reduction in deficits. The deficit is coming way down this 
year.
    Mr. Posey. Taxing unrealized capital gains would increase 
the present value of taxes or long-term gains, obviously. How 
will taxing unrealized capital gains impact the size of 
investment and the allocation of capital among alternative 
investments?
    Secretary Yellen. Generally, tax policy and interest rates 
all affect the cost of capital, and that is one factor that 
influences investment. But although, in principle, the cost of 
capital should be an important determinant of investment 
spending, most experience in empirical research suggests that 
the linkages are not terribly strong. Usually, expected output 
is more important--
    Mr. Posey. The Ukraine war is teaching us again that energy 
is a strategic as well as an economic good. In light of that, 
should we recalibrate the rush to transform the energy economy 
and increase the contribution of fossil fuels in the short- to 
medium-term, say the next 10 to 15 years?
    Secretary Yellen. I'm sorry. You asked about fossil fuels 
and what should we do about fossil fuels?
    Mr. Posey. Yes. Do you think we should think about 
recalibrating the rush to transform the economy by eliminating 
them?
    Secretary Yellen. Over time, to deal with climate change, 
we need to reduce our dependence on fossil fuels, and I think 
our energy security also will be greatly enhanced as we 
transition to renewables. I think really the only way--
    Mr. Posey. Do you think we should maybe delay the rush a 
little bit in the current times that we are in, with the energy 
being such an important force in the Ukraine right now?
    Secretary Yellen. The President has proposed using reserves 
from the strategic petroleum reserve and incenting producers to 
raise, American producers to raise oil production to deal with 
the short-run crisis that we face.
    Chairwoman Waters. Thank you. The gentleman's time has 
expired.
    The gentleman from Missouri, Mr. Cleaver, who is also the 
Chair of our Subcommittee on Housing, Community Development, 
and Insurance, is now recognized for 5 minutes.
    Mr. Cleaver. Thank you, Madam Chairwoman. And thank you, 
Ranking Member McHenry, for this hearing, and, Madam Secretary, 
thank you very kindly for your always candid comments.
    This reckless and ruthless Russian invasion of Ukraine has 
laid bare a number of things. One of them is, at least for me 
and I think millions of other Americans, that we need to 
desperately move toward creating our own sources of energy, at 
least as many of them as we can--solar, fossil or biofuels, 
whatever, say elastic--whatever we can do. And even though I 
represent Kansas City, Missouri--I represent one-half of it--I 
represent little towns that people haven't heard of like Malta 
Bend and Orrick. And one of the things that they are talking 
about is the increase in the cost of fertilizer. Most Americans 
would not even remotely consider that, but they are talking 
about the rise in the cost of fertilizer. And the fertilizer, 
at least 20 percent of it, I think, or maybe somewhere in that 
number, comes out of Belarus and Russia.
    They are having an impact on us right now, and I am 
wondering--I know that there are things that Treasury is doing 
with the IMF, and the World Bank, and international financial 
institutions (IFIs). Are there more things that Treasury can do 
to push us toward a more sustainable nation in terms of energy 
at least? I am concerned that our politics here in Washington 
may prevent us from really looking at the fact that there is a 
global existential threat brought about by climate change. I 
guess we will have to deal with it on the political stage, but 
are there other things that Treasury is doing or would like to 
do as it relates to this issue?
    Secretary Yellen. I share your concern about climate change 
as an existential threat. I think it is one that demands really 
immediate attention. President Biden has proposed a number of 
policies that Congress hasn't yet passed which would increase 
our reliance on renewables, on wind, on solar, on renewables, 
and help shift us away from fossil fuels. And I think the 
current situation in global energy markets and the risks that 
we are experiencing in the global economy is due to what is 
happening in Russia and Ukraine, which should strengthen our 
resolve to address energy security to rid ourselves of 
dependence on a global oil market where dictators in many 
places really control the price and availability of our energy 
supplies. And I think moving away from fossil fuels and toward 
renewables is critical for our energy security, as well as for 
addressing climate change.
    Both things should be pushing us heavily in that direction. 
And I hope that Congress will soon act to put in place tax 
incentives for renewables, for electric vehicles, and for other 
aspects of the climate agenda.
    Mr. Cleaver. Thank you very kindly for your visit. Madam 
Chairwoman, I yield back.
    Chairwoman Waters. Thank you. The gentleman from Missouri, 
Mr. Luetkemeyer, is now recognized for 5 minutes.
    Mr. Luetkemeyer. Thank you, Madam Chairwoman. Secretary 
Yellen, it's nice to see you this morning, and I appreciate 
your being here. As you know, I am the ranking member on the 
House Small Business Committee, and it is disappointing that we 
are now at 345 days since you failed to do your statutory duty 
by showing up there. Just a quick question: Do you intend to 
show up at all at the Small Business Committee to do your job 
of reporting on the PPP program?
    Secretary Yellen. [Inaudible.]
    Mr. Luetkemeyer. Microphone, please. Microphone.
    Secretary Yellen. Sorry. I testified--
    Mr. Luetkemeyer. Madam Secretary, I respect your comment, 
but let us be honest here. You are required to appear before 
the House Small Business Committee, and you are not there. You 
are here this morning, thankfully. That is fine. You go to 
other committee hearings, but you never show up at that one. I 
was surprised that the Chair of the Small Business Committee, 
Ms. Velazquez, didn't ask you this question, because it is very 
plain in the law. It says you must show up, and you haven't 
done it. My question is, do you intend to show up?
    Secretary Yellen. I will have my staff work with yours to 
discuss it.
    Mr. Luetkemeyer. That would be fantastic. Thank you. I 
think it is a repeat of the last question or time we have 
talked about this, but at least it is a commitment to do 
something.
    With regards to the subject we have in front of us this 
morning, I want to ask you the same question that I asked 
Chairman Powell the other day, which was, I am thankful and 
agree with a lot of the sanctions that you are putting on the 
Russian economy, and oligarchs, and all of the other things you 
are doing. I don't disagree with those things. I think we voted 
that you added more. My concern was or is that it got done 
late. Instead of being reactive, we should have been proactive. 
We knew that the Russians were building three hospitals on the 
Ukrainian border. We knew they were going in, and yet we did 
nothing until after the fact.
    My question to you this morning is, knowing that this was 
going to happen, we did nothing. The ranking member made a 
comment this morning about China, knowing that they are going 
to go in. In fact, there is a published report in the 
newspapers last week which said that China was going to go into 
Taiwan this fall and decided not to do it. I don't know if that 
report is true or not, but it was in the paper. Therefore, I 
think we need to take it seriously. And if that is the case, 
are you working with the Administration? Are you putting plans 
in place as the Treasury Secretary to come with some deterrence 
with sanctions right now before they get in there and not wait 
till after they invade Taiwan?
    Secretary Yellen. We told Russia that we would impose very 
heavy costs on it if it invaded Ukraine, and the purpose was to 
deter that action. You wouldn't deter the action by putting in 
place sanctions before--
    Mr. Luetkemeyer. Yes, you can. Madam Secretary, with all 
due respect, you can do that. When they built the hospitals on 
the border, you said that is an insurgence action on your part. 
Therefore, we are going to do this. If you build another one, 
we are going to do this. If you build another one, we are going 
to do that. If you invade, we are going to do this. That can't 
be done. There is a way to deter that if it is structured 
correctly. And my question is, are you thinking about doing 
this with China, yes or no?
    Secretary Yellen. We are certainly working together in the 
Administration to have in place a wide range of tools and 
strategies.
    Mr. Luetkemeyer. Okay. With regards to other actions that 
are going on right now, Madam Secretary, I am very concerned 
about a speech that was made recently by one of the members of 
FSOC. Do you think the financial stability of United States 
would be threatened if roughly a quarter of the deposits of 
United States were not insured by the FDIC? Do you think it 
will hurt the financial stability of our country if 25 percent 
of the bank deposits in this country were not insured by the 
FDIC?
    Secretary Yellen. I am not sure what you are referring to, 
but I would certainly say that deposit insurance has played a 
critical role in making runs everywhere.
    Mr. Luetkemeyer. I am sure you would agree that this is 
extremely important. The FDIC insurance underpins the stability 
of our banking economy.
    Because what happened was Mr. Chopra--and I have his speech 
right here--made a speech last week in which he made a comment 
that he thought it was okay to limit access. One of the 
punitive actions he took as a suggestion, as a result of 
continued violations by bankers and big banks especially, was 
to limit access to deposit insurance and put banks directly 
into receivership. Don't take my remarks wrong here. I think if 
these guys are doing bad things, they need to be punished, 
maybe fined, thrown in jail, I don't care. But what you are 
doing when you undermine the financial system by saying pulling 
FDIC insurance, you are hurting the consumers, the customers of 
those banks. And this is a gentleman who has intended or should 
be worried about consumers. I would hope that you would be 
concerned about that.
    Chairwoman Waters. The gentleman's time has expired.
    The gentlewoman from Ohio, Mrs. Beatty, who is also the 
Chair of our Subcommittee on Diversity and Inclusion, is now 
recognized for 5 minutes.
    Mrs. Beatty. Thank you, Chairwoman Waters. I would like to 
also thank Secretary Yellen for appearing before the committee 
today. Actually, I appreciate your leadership as Treasury 
implements the sanctions against Putin's regime, particularly 
as more details of war crimes and atrocities committed in 
Ukraine come to light.
    First, let me say I welcome your testimony that the 
international financial institutions will be providing support 
to the countries that are welcoming refugees. And this is 
something that I have been concerned about since the very 
beginning of the humanitarian crises. As you may know, last 
month when this committee marked up legislation related to the 
Ukraine crises in Russian sanctions, I was pleased to have a 
bipartisan provision added that will address the United States, 
well, really you in your capacity as Secretary, to use our 
position on the IFIs to encourage economic support for 
refugees, including those of African descent who have been 
faced with particular hardship.
    Can you tell me how the financing made available by the 
IFIs will be used to aid refugees, and how can we ensure that 
these funds are being distributed equitably?
    Secretary Yellen. I think that the international financial 
institutions have a critically important role in helping 
refugees and helping countries that are hosting refugees. And 
we will have meetings of the international financial 
institutions, the IMF, and the World Bank the week after next, 
and we will be involved in active discussions with them about 
how to fashion programs to make sure that aid is distributed 
effectively. Bilaterally, we will also be involved in that and 
the European Union will as well.
    Mrs. Beatty. Thank you. I am going to try to get in two 
more questions, but while I have you, let me quickly follow up 
on something that you and I have talked about. And let me just 
say up front, your staff has worked extremely well with my team 
in putting Harriet Tubman in her rightful place on the $20 
note.
    But I guess I have a concern, and while I am thankful for 
your engagement, I am not pleased with the timeline that is 
left out. I realize you inherited a lot. I know we had been 
working with your predecessor during the Obama Administration, 
and we thought we had made great headway. And I understand the 
technical limitations for the security features, the production 
capacity, and all of that, but I really don't see any reason 
why the concept and design steps couldn't be moved much faster. 
Getting the design for each stage would mean a lot to the 
people who have been working on this and waiting on this for 
far too long, for too many years.
    I know this is a problem that you inherited with the delays 
made by your predecessor, and I would ask for a commitment from 
you to move this process along. And I guess what I want to hear 
today is if we could take maybe the part that shows her 
imaging. We have a piece of legislation, bipartisan with 
overwhelming [inaudible] to get to the $200 sign on this that 
we can [inaudible] that stage of the image, if you could take a 
few seconds and respond.
    Secretary Yellen. What I can say is I promise for my own 
part to do everything I possibly can to expedite this process, 
and I know that there was no action on it during the previous 
Administration. We are still adhering to the original timeline 
that was announced. I am trying to remember when it was first 
announced. Maybe it was 2014 if I am not mistaken.
    Mrs. Beatty. You are correct.
    Secretary Yellen. It is a frustratingly time-consuming 
process, and it involves developing technologically-
sophisticated security features, new security features, the 
generation--
    Mrs. Beatty. I hate to cut you off, but my time is going to 
expire. I do want to show that we have an image, and we are 
going to do the legislation to lock in this image [inaudible] 
support us in that. Thank you, and my time is up.
    Chairwoman Waters. Thank you. The gentlelady's time has 
expired.
    The gentleman from Michigan, Mr. Huizenga, is now 
recognized for 5 minutes.
    Mr. Huizenga. Thank you, Madam Chairwoman, and Secretary 
Yellen, it's good to have you back here in person and to see 
you again.
    Very, very briefly--don't filibuster me on this one, 
please--but the last time you appeared here with Chair Powell, 
you had claimed that you felt inflation was, at that point, 
transitory. Do you still believe that today? Very briefly, 
please.
    Secretary Yellen. When I used the word, ``transitory,'' I 
was thinking that it is related to the pandemic, and that when 
the pandemic goes away, that would make a big difference. I 
still believe that.
    Mr. Huizenga. Do you still believe it is transitory?
    Secretary Yellen. I believe that the pandemic, 
unfortunately, has been and will be longer lasting than I 
anticipated.
    Mr. Huizenga. So basically, you are saying the pandemic is 
still happening. That is why we are still seeing inflation?
    Secretary Yellen. I think that is one of the contributors 
to it.
    Mr. Huizenga. Okay. Let me get into the meat of what we 
need to talk about here about what is happening on 
international situations. Madam Chairwoman, thank you for 
including my legislation in the 16 bills that were actually 
noticed for this hearing today. I had a bill, the Russian 
Sovereign Debt Prohibition Act, which was noticed, and this 
bill would simply prohibit U.S. financial institutions from 
financing Russian sovereign debt regardless of the day the bond 
was issued, extending the Biden Administration's current 
restrictions on new bonds that are being issued. And I know 
that it was supposed to be considered in the March markup, but 
something happened, and somehow it fell off. I think we are 
trying to do everything we can to tighten those restrictions, 
and I respectfully ask that the chairwoman include that 
legislation in the next package of bills that we might 
consider.
    Yesterday, I reintroduced another bill that I had 
previously called, the No U.S. Financing for Iran Act, a bill 
that would effectively prevent U.S. financial institutions from 
engaging with the government of Iran, while prohibiting both 
the IMF and the Export-Import Bank from providing them 
financing. Specifically, my bill would prohibit the exchange of 
Special Drawing Rights, and it is similar to what my colleague, 
Mr. Hill, has worked on regarding Russia.
    Secretary Yellen, can you certify that the Biden 
Administration will oppose the exchange of Iran's SDRs, the 
Special Drawing Rights with any country even if the 
Administration concludes a new nuclear agreement with Tehran?
    Secretary Yellen. Iran has not been able to use its Special 
Drawing Rights. The United States would not exchange SDRs for 
dollars, nor have our partners. And I don't see that change--
    Mr. Huizenga. Okay. So, you commit to continuing that?
    Secretary Yellen. We will have to see what happens if they 
sign a bill, but I have no--
    Mr. Huizenga. That is a different answer than, ``We have no 
intention to.''
    Secretary Yellen. There is no change in U.S. policy. We 
have not been willing to, in any way, aid Iran in using its 
SDRs, and I don't envision that changing.
    Mr. Huizenga. Okay. The Washington Post had an article over 
the weekend saying that Tehran has demanded that we lift the 
Islamic Revolutionary Guard Corps designation as a foreign 
terrorist organization. That same article quoted a high-ranking 
Iranian official who said that effectively, an agreement to 
revive the nuclear deal with the U.S. is closed. Do you think 
that is a fair assessment, first of all? And as you know, 
President Trump had put in that original designation back in 
2019. It is still heavily-sanctioned, and there has been some 
enforcement actions, but designations have been lifted. Does 
the Biden Administration continue to believe that the 
Revolutionary Guard is a foreign terrorist organization?
    Secretary Yellen. They are designated as such. There are 
active negotiations taking place over the Joint Comprehensive 
Plan of Action (JCPOA), but I can't comment on the details of 
what is happening in those.
    Mr. Huizenga. Can't or won't?
    Secretary Yellen. I don't believe I can or should.
    Mr. Huizenga. Okay. So you may have that knowledge, but you 
are not able to share it?
    Secretary Yellen. I am not deeply involved in the details 
of those negotiations.
    Mr. Huizenga. Okay. Have you or anyone else at Treasury 
been directed to reduce Iranian sanctions enforcement so as to 
not interfere with those Vienna talks?
    Secretary Yellen. We haven't changed our sanctions.
    Mr. Huizenga. That is not my question. Have you been 
instructed to or requested to? You may have ignored it. I guess 
that is what I am trying to find out.
    Secretary Yellen. There has been no change in any 
Administration policy, to the best of my knowledge.
    Mr. Huizenga. And I will follow up with some written 
questions as well. I appreciate it. I yield back.
    Chairwoman Waters. The gentleman from California, Mr. 
Vargas, is now recognized for 5 minutes.
    Mr. Vargas. Thank you very much, Madam Chairwoman, for this 
hearing, and I especially want to thank the Secretary for being 
here. I appreciate it.
    Madam Secretary, I want to apologize that I wasn't here for 
the whole hearing. I have another hearing that is running at 
the same time, which happens around here quite a bit, as you 
know. But it sounded like someone was trying to put words in 
your mouth about the issue of inflation being transitory or 
related to the pandemic. Could you say a little bit more about 
that, because I think a lot of people are starting to forget 
that we are in a pandemic and so much of this inflation is tied 
to that? Could you comment on that, please?
    Secretary Yellen. Yes, certainly. In part, the inflation 
represents the impact of supply bottlenecks. For example, a 
third of the inflation we have had reflects higher prices of 
new and used cars. And, unfortunately, the auto companies were 
unable to get sufficient semiconductors to produce cars at 
capacity. Inventories are highly depleted, cars, both new and 
used, are in tremendous demand, and their prices have risen. 
But also, we have had enormous demand for goods, for imports 
particularly coming from East Asia that have resulted in higher 
shipping costs, higher trucking costs. These disturbances, 
these inflationary developments are pandemic-related because we 
saw enormous shifts away from services and towards goods during 
the pandemic, a huge increase in the demand for durable goods 
that strained the capacity of the U.S. and global economies to 
meet those demands in a timely fashion. And that is what I mean 
in part by being pandemic-related.
    We do have a very tight labor market. Core inflation is 
also quite high. Addressing the pandemic, I believe, will help. 
The Federal Reserve also has a job to do with respect to 
inflation.
    Mr. Vargas. Madam Secretary, I am a car guy. I collect 
cars, and I pay attention to the prices of cars. I normally 
collect old ones, not new ones. But the truth of the matter is, 
you normally don't pay MSRP for a new car. You normally pay 
below that. That is what you negotiate. But a lot of these cars 
have been selling above MSRP, and, again, it is because of the 
same issue. It is the pandemic. I think that is what you were 
saying in layman's terms--you weren't saying in layman's terms, 
but I say, in layman's terms. That is why cars are so 
expensive.
    Secretary Yellen. Sure. Inventories of cars are depleted 
because the American car companies aren't able to produce at 
their capacity. They just can't get the semiconductors that 
they need to embody into these cars. And that is because the 
demand for goods and for technology devices that incorporate 
semiconductors became so enormous during the pandemic. It takes 
a long time to increase semiconductor manufacturing capacity. 
American companies are in the process of doing it. But at the 
moment, I think if you go to a car lot and try to go to a 
dealership, you see almost no inventory available to purchase, 
and that is why you pay more than MSRP.
    Mr. Vargas. That is right, and now I do want to put some 
words in your mouth. I believe they are your words. And I think 
you were saying the war in Ukraine threatens to inflict, and I 
think this is what you said, ``enormous economic 
repercussions.'' Again, you may have commented already, but I 
have 30 seconds left. Could you comment on that?
    Secretary Yellen. Sure. The sanctions that we have placed 
on Russia are pushing up the price of energy. We think it is a 
price that is important to pay to punish Russia for what it is 
doing in Ukraine, but energy prices are going up. The price of 
wheat and corn that Russia and Ukraine produce are going up. 
And metals that play an important industrial role--nickel, 
titanium, palladium that goes into catalytic converters--the 
costs of those things are going up, fertilizer, potash, and 
this is going to escalate inflationary pressures as well.
    Mr. Vargas. Thank you. I yield back.
    Chairwoman Waters. Thank you. The gentleman from Kentucky, 
Mr. Barr, is now recognized for 5 minutes.
    Mr. Barr. Thank you, Secretary Yellen, for your testimony.
    Let me follow up with Ranking Member McHenry's line of 
questioning about the energy loophole in the sanctions on 
Russian banks. I have talked to Deputy Secretary Adeyemo about 
this, and he is a very impressive guy, and he is open-minded to 
my line of inquiry. I hope you are as well. I have a bill 
called the No Energy Revenues for Russian Hostilities Act that 
would close that loophole or give the Administration the option 
to create an escrow arrangement which requires all Russian 
energy revenues to be allocated for humanitarian purposes, 
which is similar to arrangements currently in place with Iran.
    To the extent that you have concerns or the Administration 
has diplomatic concerns or sensitivities with respect to our 
European allies over dependence on Russian gas, this 
legislation or this approach would enable you to retain the 
ability to waive or license specific transactions to help our 
European allies get those supplies of gas, but then escrow the 
proceeds of those transactions and have a carrot approach, not 
just a stick, but a carrot approach, build up those revenues 
and say to Putin, withdraw, you get your gas revenues, but only 
if you withdraw from Ukraine and only if you use these proceeds 
for humanitarian purposes. Would you be open to that approach?
    Secretary Yellen. I think something along those lines is a 
constructive suggestion, and I think it is an approach that is 
worth exploring. We have made it. We have a way for Russia to 
sell oil and gain the proceeds in the form of a general 
license, but the license is temporary. It will expire. We 
probably need a better mechanism. I think it is a constructive 
suggestion.
    Mr. Barr. Thank you, and your Deputy, Mr. Adeyemo, was open 
to that as well. I appreciate that you are looking at that. 
Again, it is a bill that I have, the No Energy Revenues for 
Russian Hostilities Act. I think this is the loophole that we 
need to close. This is what President Zelensky is asking for 
when he says we need to be tougher on sanctions. This is what 
is financing Putin's war is the foreign currency that is being 
used through these energy transactions. This is what we need to 
cut off to the extent we can.
    Secretary Yellen. I would just emphasize that we need the 
flexibility to work with our partners on this.
    Mr. Barr. I understand.
    Secretary Yellen. This coalition has been critical to our 
success.
    Mr. Barr. I agree, Madam Secretary.
    Secretary Yellen. We have to be careful not to be 
unilateral in our approach.
    Mr. Barr. I agree with that, but this bill and this 
approach would give us that flexibility. It would enable you to 
provide some of those transactions, allow some of the 
transactions to go through for our European allies, but build 
those proceeds up in an escrow account and give an incentive 
for Putin to withdraw.
    Let me ask you another question, switching gears here. As 
someone who served as both Chair of the Federal Reserve, and 
now in your capacity as Treasury Secretary and the Chair of 
FSOC, you have a unique view into the regulatory landscape for 
the financial services industry. One of the things that I have 
always wanted to learn more about is how our regulators 
developed frameworks with international standard-setting 
bodies; decisions made at Basel and the FSB are highly 
impactful to the U.S. economy. And I don't feel like Congress 
really has any insight or visibility into what the United 
States advocates for in these negotiations.
    What types of materials and briefings were you given as Fed 
Chair, and now as FSOC Chair, with respect to what we commit to 
in these groups? What types of materials can we get for this 
committee to ensure that the advocacy is in line with the 
policy goals of the Congress?
    Secretary Yellen. We can try to provide you with materials 
and briefings. The Financial Stability Board (FSB) and the Bank 
for International Settlements (BIS) publish their work papers 
on their websites. There is no regulatory enforcement through 
those agencies there. These are fora in which we discuss with 
partners around the world what would be desirable regulations, 
but it doesn't in any way inhibit what we can do or compel us 
to do anything in the United States. We do what is in our 
interest, but it is a way to try to have a global system that 
is coordinated and coherent.
    Mr. Barr. Thank you, Madam Secretary. I yield back.
    Chairwoman Waters. Thank you. The gentleman from Illinois, 
Mr. Foster, who is also the Chair of our Task Force on 
Artificial Intelligence, is now recognized for 5 minutes.
    Mr. Foster. Thank you, Madam Chairwoman, and Secretary 
Yellen.
    Secretary Yellen, I understand that you will be giving a 
speech tomorrow regarding digital asset regulation. I don't 
want to force you to reveal any spoilers here. I do want to 
touch on something that I believe is just at the core of 
developing any well-regulated digital asset ecosystem. And that 
is, how can participants securely and reliably assert their 
digital identity online and offline with the appropriate 
controlled anonymity that is being developed in the E.U. and 
elsewhere? I was very encouraged that Assistant Secretary for 
Terrorist Financing and Financial Crimes Elizabeth Rosenberg 
recently announced that the Treasury plans to make 2022, ``a 
year of action for digital identity.'' There are really a host 
of reasons why Treasury may be the most appropriate authority 
to help deploy a secure digital identity framework.
    I am also very encouraged that the technical components for 
privacy preserving, call it a crypto financial driver's 
license, are actually in place. The mobile ID or digital 
driver's license that are being rolled out by a number of 
States are based on interoperable standards originally 
developed at the National Institute of Standards and Technology 
(NIST), and are now being adopted by international standards 
organizations around the world, and they have actually been 
implemented for both iPhone and Android. These allow a modern 
cellphone to be used as a very high-quality privacy-preserving 
biometric second factor that will be absolutely crucial in 
combating identity fraud and many other online misbehaviors. 
Your Department's work towards combating illicit finance and 
preventing government benefits fraud, soon a central bank 
digital currency, would all greatly benefit from an improved 
and internationally-operable digital identity framework.
    Can you speak a little bit about how Treasury might be 
well-equipped for such an effort that will really require an 
extraordinary level of international and interagency 
cooperation?
    Secretary Yellen. I believe this is a very important 
initiative. I am not an expert on the details, but I would say 
to you that the Treasury has very wide-ranging equities in the 
digital identity space, in part because we administer public 
benefits and tax refunds, and because we have a broader role in 
the financial system. So, we absolutely want to explore how we 
can develop and implement digital identities solutions that 
will coordinate across the government.
    And we are at this point flushing out actions that we can 
take to advance this agenda. If you have specific ideas, we 
would welcome the opportunity to discuss them with you when I 
can have my staff give a briefing on what we are thinking of 
that as well, if that would be useful. But I would like to--
    Mr. Foster. Yes, thank you for that.
    Secretary Yellen. --have the benefit of your thinking on 
this.
    Mr. Foster. Yes, and I think that the international 
collaboration will be essential from the start. If you are 
really going to have a central bank digital currency, you need 
a means of authenticating yourself as a legitimate participant 
for a central bank digital currency, and you want foreign 
nationals to participate in your central bank digital currency, 
you are going to have to have agreements, at least among the 
free democracies of the world, as to how this is really going 
to work. And so I urge you, it seemed very much in line with 
the Biden Administration's push towards getting the free 
democracies of the world to act coherently to do things like 
preventing corruption, financial fraud, and it is going to be 
really at the heart of this.
    And can you say a little bit about the Executive Order 
related to crypto that has come out and how you see Treasury's 
participation going in that?
    Secretary Yellen. The Executive Order related to digital 
assets?
    Mr. Foster. Right.
    Secretary Yellen. Yes. The President has asked the 
agencies, but Treasury plays an important role in assessing the 
future of money and that entails the role of digital assets, 
how we can create an environment in which responsible 
innovation can flourish, but there is adequate protection of 
consumers, investors, financial stability concerns, risks of 
illicit finance. We need a regulatory framework that I think we 
don't have at this point, and we want to make recommendations 
as to how we can safely do this. Also, look at the pros and 
cons of the central bank digital currency.
    Chairwoman Waters. Thank you. The gentleman's time has 
expired.
    The gentleman from Texas, Mr. Williams, is now recognized 
for 5 minutes.
    Mr. Williams of Texas. Thank you, Madam Chairwoman. And in 
full disclosure, Madam Secretary, I am a car dealer. There is a 
lot of conversation going on about my industry. I would love to 
talk to you one day about it after COVID, what life is after 
COVID in the car industry.
    I also want to follow-up on Mr. Luetkemeyer's question on 
the Small Business Committee, of which I am also a member. You 
seemed to not answer the question again, and you said you 
needed to talk to your staff first. I don't understand why you 
need to talk to your staff to attend a meeting you are required 
to attend. So, can you say you will come and see us?
    Secretary Yellen. Certainly--
    Mr. Williams of Texas. Okay.
    Secretary Yellen. I am certainly prepared to discuss it.
    Mr. Williams of Texas. Thank you. You spent the last few 
months touting the new international tax regime that you have 
been negotiating with other large economies. And recently, 
numerous American businesses have raised concerns about some of 
the details that have started to come to light, and independent 
experts that have examined the deal found that the U.S. 
companies are disproportionately negatively impacted.
    Foreign companies, our competitors in other words, have 
negotiated protections for key industries. Luckily for our 
business community, whatever international agreements you make, 
all of them may need congressional approval. And you will 
either need to get the deal classified as a treaty, which would 
require the approval of 67 Senators or a revenue-generating 
proposal, which would need to pass both Chambers of Congress. 
So regardless of how the agreement is ultimately classified, 
you will not be able to follow through on any of your promises 
without significant buy-in from Congress.
    And I guarantee you that the support you need to make these 
drastic changes to international tax law do not exist. They are 
not here in the House or the Senate, because right now we are 
hearing from U.S. companies that this deal makes them less 
competitive. So, Madam Secretary, how will you prove your 
congressional engagement as these negotiations progress?
    Secretary Yellen. We have been engaged over the last 
several years in briefings on both sides of the aisle, members 
of the committees about the tax agreement and have kept people 
up to date, Members of Congress up to date on the negotiations 
that have taken place in the OECD bill. So-called pillar two is 
really ready for enactment, and a package that would have met 
our commitments was in the House, passed a reconciliation bill 
that hasn't progressed in the Senate. But we think that the 
idea that this does harm the competitiveness of American 
businesses, I really have to push back strongly against this.
    I think the United States now is the only country in the 
world that has a minimum global tax. And what this deal does is 
commit 137 countries around the world to establishing a global 
minimum tax, which will greatly enhance the competitive 
position of our firms that are the only ones that face this 
now. And for the globe, it will stop the race to the bottom in 
terms of countries lowering their tax rates and leaving 
countries unable to raise the tax revenues that businesses need 
us to have to invest in infrastructure and other things that 
will make our economy competitive.
    Mr. Williams of Texas. Just a bit of raising taxes is not a 
winnable position, I don't think, and that is where I stand, 
and where a lot of people stand. Last week, the Federal Reserve 
Bank of San Francisco released a study which showed an 
inflation spike last March after Democrats forced the American 
Rescue Plan through Congress. They analyzed the current U.S. 
inflation rate against other developed economies and concluded 
that upwards of 3 percent of the inflation we are experiencing 
can be attributed to government spending. We know how the 
government spends.
    Unfortunately, some people in Congress are trying to revive 
the Build Back Better Act to spend trillions more dollars in a 
time when the economy is already overheated. They often cite 
the same economist who incorrectly claimed inflation was 
transitory. We talked about that today, as the ones who now say 
Build Back Better will reduce inflation. So, we cannot double 
down on the reckless government spending continue to drive up 
inflation. I can tell you as a small business owner, I know 
what that is doing to our business.
    Madam Secretary, I have a two-part question. First, who in 
this country is hurt the most by the inflation? That would be 
my first question.
    Secretary Yellen. Households or consumers are hurt by 
inflation, and low-income consumers probably bear the biggest 
burden.
    Mr. Williams of Texas. Okay. My time is up, and I yield 
back.
    Chairwoman Waters. Thank you very much.
    The gentleman from California, Mr. Sherman, who is also the 
Chair of our Subcommittee on Investor Protection, 
Entrepreneurship, and Capital Markets, is now recognized for 5 
minutes.
    Mr. Sherman. Madam Secretary, at the beginning of this 
year, we faced $16 trillion of legacy LIBOR, where the parties 
would not know how much interest should be paid by the borrower 
to the lender. We have solved that problem. I want to thank you 
and your staff for your help in drafting the LIBOR Act. And 
then, I want to thank the other part of your staff for promptly 
issuing tax regulations to clarify what I think was obvious, 
but it always deserves clarification when you are dealing with 
$16 trillion, and that is that there was no sale or exchange as 
a result of the change in index.
    The Chair of the Small Business Committee brought up in her 
comments the issue of cryptocurrency and Russians using that to 
evade our sanctions. I want to commend to all members of this 
committee, the bill I have dropped today, the Russian Digital 
Asset Sanctions Compliance Act, which would give the 
Administration the authority to tell crypto exchanges that they 
have to shut down all Russian wallets or some portion of 
Russian wallets. The crypto exchanges have announced that they 
are going to do business as usual with all those that they 
believe are Russian citizens or Russian companies unless and 
until laws are passed that require them to do otherwise. This 
is in real contrast to so much of the rest of the private 
sector, which has voluntarily cut off Russia, particularly 
their oligarchs and government.
    The ranking member of the committee brought up the issue of 
a possible invasion of Taiwan. I look forward to working with 
him and others on this committee on a bill that would strip 
China of its most favored nation status or normal trade 
relationship with the United States automatically should there 
be an invasion or blockade of Taiwan. We have, of course, 
focused on Ukraine, and I will in a second, but an even greater 
disaster is occurring in the world, and that is in the 
Ethiopian region of Tigray, where 500,000 people have been 
killed. This has been done not only by the Ethiopian 
government, but the government of Eritrea, which has imposed a 
blockade that threatens to kill hundreds of thousands, if not 
millions of people.
    Given the short time, I am going to ask you to respond, for 
the record, what additional sanctions can we impose, 
particularly on Eritrea, which has crossed international 
borders for the purpose of engaging in a coordinated genocide 
against the people of Tigray?
    It is hard to seize Russian oligarch assets if you don't 
know who owns what. The Washington Post reported on March 16th 
that finding yachts and mansions is easier than uncovering 
money in private equity funds that don't need to comply with 
the same anti-corruption rules. U.S. private equity, hedge 
funds, venture capitals are not currently required to disclose 
beneficial ownership information of their investors to FinCEN 
nor they are required to provide that information to the SEC.
    In February, the House passed the America COMPETES Act, 
which included an amendment that I authored requiring the 
issuers of large issuances of exempt securities to file 
beneficial ownership with the SEC. So, we do need to know about 
this $11 trillion of private securities market if we are going 
to know what is owned by which government agencies in Moscow or 
which Russian oligarchs. Congresswoman Maloney's Corporate 
Transparency Act now requires Treasury to establish a Federal 
beneficial ownership database administered by FinCEN. Madam 
Secretary, can you give us information on the time frame when 
we expect this database to be set up?
    Secretary Yellen. At FinCEN, we are working very hard to 
establish that database as rapidly as possible and have come 
out with one of the two proposed rules that we need. It is a 
very complex undertaking. We want to get it right. I want to 
respond on the issue about private equity firms and hedge funds 
that we share the concerns of Members of Congress who have 
raised this issue, and we are actively considering a rule that 
would address potential gaps in the AML/CFT coverage for 
investment advisors. And I do believe that this is something 
that needs to be addressed.
    Mr. Sherman. Thank you. You may just have to respond to 
this for the record, but we now have a climate counselor in the 
Administration to coordinate a broad range of work regarding 
climate-related finance, economic, and tax policy. I hope you 
can provide us with an update on Treasury's efforts to 
coordinate with our international partners.
    Secretary Yellen. I would be happy to.
    Mr. Sherman. Thank you.
    Chairwoman Waters. Thank you. The gentleman from Arkansas, 
Mr. Hill, is now recognized for 5 minutes.
    Mr. Hill. Thank you, Madam Chairwoman. Madam Secretary, 
it's so good to have you back before the committee, and I 
appreciate my colleagues discussing at length the role of the 
Special Drawing Rights issues that you and I have talked about 
several times. But I think it does merit noting that the $17.5 
in equivalent SDRs that were issued last summer by the IMF to 
Russia boosted their total SDR balance to 72 percent, meaning 
that the largest portion of their SDRs are from last year's 
allocation. And it is really their gold and their SDRs that, in 
my view, are still subject to the ability to avoid sanctions. I 
think it is a real risk, and that is why I am also glad, 
Chairwoman Waters, that we marked up H.R. 6899 that encourages 
you, as our Treasury Secretary, to make sure that the U.S. 
works very hard to make sure that Russia and Belarus cannot in 
any way exchange their SDR. So, thank you for that work.
    I want to follow up, though, on our conversation we had 
last summer. You made some commitments to the committee and to 
the public about the enhanced rules that the IMF would do about 
that SDR issuance. You told us in March last year you were 
working with the IMF to craft rules that would make it 
difficult to exchange. Did the IMF release those rules?
    Secretary Yellen. The IMF has given countries guidelines 
about appropriate use of SDRs, and there is a disclosure 
framework so that we can monitor how they are being used. I 
don't quite know where you can access those, but I know that 
they have been produced.
    Mr. Hill. I think it will be useful for the committee to 
have that access to those guidelines. And do you know if any 
SDRs were exchanged since they were issued for payment in any 
form of debt?
    Secretary Yellen. I can't give you a detailed rundown, but 
I can tell you that the United States--
    Mr. Hill. No, I know the United States isn't doing it. That 
isn't the question. This is in your capacity of overseeing our 
role as the largest shareholders in the IMF. I know that the 
U.S. is in good standing here, but one of the concerns last 
year was that you couldn't obtain that commitment from anybody. 
We didn't ask anybody to commit to it in advance of it being 
issued, so we have not seen that guidance. We don't know what 
transactions have taken place, if any, over the past year, so I 
think that would be very helpful.
    Secretary Yellen. We will try to work with you on that.
    Mr. Hill. Thank you very much. And this is all why I 
introduced H.R. 1568, the Special Drawing Rights Oversight Act, 
which would require congressional approval for all allocations 
of SDRs equal to 25 percent of the U.S. quota rather than the 
100 percent under current law; limit unilateral allocations to 
once every 10 years rather than every 5 years; and require 
congressional consultations 180 days before consenting to an 
allocation rather, than 90 days. We don't need to reiterate how 
much we have, I think, demonstrated that last year's SDR issue 
across the board to all members of the IMF was a mistake, as 
noted by Ranking Member McHenry.
    On the subject of FinCEN, do you believe that FinCEN should 
have the nationwide authority to review any transaction of any 
amount on any subject out in the financial space over $10,000? 
In other words, expand the geographic targeting that they do to 
a nationwide audience. Do you think that is appropriate?
    Secretary Yellen. I am not sure. I need to get back to you 
on that. I know that FinCEN has some concerns with geographic 
coverage because of the prevalence of internet transactions and 
would like to see some change--
    Mr. Hill. I would like to hear your personal view on that 
because with no limitations, that would mean every transaction 
over $10,000 will be subject to review by FinCEN staff and 
added to a database. That seems unusual to me, and perhaps not 
prudent, so I would like your personal view on that.
    The last subject I wanted to raise with you is we have all 
expressed some concerns, including the chairwoman, about the 
performance of our managing director at the IMF, Kristalina 
Georgieva, and I have concerns about her qualifications. Do you 
share those concerns? Do you have all the faith in the world in 
her leadership at the IMF?
    Secretary Yellen. I believe that she has done a good job of 
guiding the IMF. We have been very supportive of the work that 
the World Bank did to look into the World Bank's doing business 
report--
    Mr. Hill. Thank you, Madam Chairwoman. I am going to send 
to our oversight committee, Madam Chairwoman, a letter 
requesting an investigation of the Director of the IMF. Thank 
you.
    Chairwoman Waters. Thank you.
    We will now hear from the gentleman from Colorado, Mr. 
Perlmutter.
    Mr. Perlmutter. Thank you, Madam Chairwoman. Madam 
Secretary, it's good to see you.
    Secretary Yellen. Thank you.
    Mr. Perlmutter. I want to give you the state of play of 
safe banking, which is cannabis and banking. You and I have had 
many conversations about this, but I want you to understand 
where it is and to put the muscle of the Administration behind 
getting it passed.
    We have passed it now out of the House 6 times. Most 
recently, it was amended onto the America COMPETES Act. The way 
we passed it has been with sizeable bipartisan majorities. When 
it was a standalone, we passed it 321-101, and it gets to the 
Senate and gets stuck. And when Senator Crapo chaired the 
committee basically from the Republicans point of view: too 
big, too broad. Now, Senator Brown is the Chair of the 
committee: too limited, too narrow. But we know that people are 
still getting killed and robbed. And most recently, the Seattle 
Times did an editorial last week because three people were 
killed in Seattle last week--a robber, a police officer, and an 
owner of a dispensary--because of all of the cash. In Oakland, 
California, in November, there were 25 armed robberies in 1 
week, and we had a young woman speak with us who was one of 
those who was robbed, and then she got robbed again last week.
    Small businesses, minority-owned businesses need access to 
capital, which they would get if the banking system were open 
to them. I was speaking to the national bank supervisors last 
week, and I said to them, this isn't Ukraine, this issue isn't 
Ukraine, this issue isn't nuclear winter, this issue isn't 
climate change, but it is a real problem. And they said, yes, 
you are sent there to solve problems and they expect this 
problem to be solved. I would like to just get your sentiment 
on this subject since you and I have talked about it for a very 
long time.
    Secretary Yellen. We have talked about it for a very long 
time, and I agree with you. It is an important issue, and it is 
an extremely frustrating one that we haven't been able to 
resolve. I really appreciate your leadership in this area. We 
have worked with you on this bill. We are supportive of it. As 
you know, there is a conflict between State and national law, 
banks are trapped in the middle of that, and some legislative 
solution, I think, is necessary to move this forward. I share 
your frustration that we haven't been able to make progress. I 
think it does really require congressional action.
    Mr. Perlmutter. And I thank you for that. And I guess I 
just ask you to impress upon the Administration the need to 
either get it passed as part of the America COMPETES Act, which 
I think will be coming up the quickest, so that nobody else 
dies because there is so much cash or standalone, but get it 
out of the Senate and get it to the President.
    Secretary Yellen. We would like to see that happen.
    Mr. Perlmutter. Thank you very much. I will switch to 
Ukraine for a second. One of the things that we have seen is, 
President Biden has brought together all sorts of nations to 
deal with sanctions on Russia and in response to the invasion. 
However, Russia has been preparing for this moment for some 
time and Putin has been attempting to sanction-proof his 
economy. What should we make of the Russian rubles recovery 
from the freefall it saw in early March, and is this a sign 
that the Russian economy is more resilient than we originally 
thought?
    Secretary Yellen. The Russian economy is really reeling 
from the sanctions that we put in place, and the market in 
rubles is not a free market where the value that is established 
in trading reflects the value if the currency could be freely 
traded. Russians aren't allowed to sell assets. Foreigners who 
own Russian assets are not allowed to sell rubles and take 
their money from the country. There are capital controls in 
place, and the restrictions that Russia and the Russian Central 
Bank have put on Russians leads to a situation in which you 
shouldn't really infer anything from the value of the currency.
    Mr. Perlmutter. Thank you for your service, and my time has 
expired.
    Chairwoman Waters. Thank you very much. The gentleman from 
Georgia, Mr. Loudermilk, is now recognized for 5 minutes.
    Mr. Loudermilk. Thank you, Madam Chairwoman. And thank you, 
Madam Secretary, for being here today.
    I want to shift gears a little bit and talk about the 
implementation of the Anti-Money Laundering and Beneficial 
Ownership Reform Law that I know that you are working on right 
now. And the new rules from FinCEN really will require regular 
reporting of beneficial ownership from about 30 million 
businesses along with about 2 million new businesses per year. 
Now, the vast majority of these businesses are law abiding, and 
their focus is on serving their customers, and making payroll. 
They are law-abiding businesses, but they don't stay tuned into 
what is going on here on Capitol Hill. They are not watching 
the C-SPAN coverage of this today. They are trying to make a 
living. And so, I see that it is going to be a real challenge 
to make sure they are aware of these new rules.
    Now, we don't want this to become a, ``gotcha,'' 
enforcement mechanism that is used by unfortunately too many 
agencies now as punishment for someone who just isn't aware 
that they have to give up this type of information, and, quite 
frankly, most of them are small businesses. So, my question is, 
what is your plan to work with State Governments to make sure 
that small businesses are aware of the requirements and so they 
all know how they have to comply?
    Secretary Yellen. I think you raised an important point 
that it is important to be in touch with these businesses. I 
can't tell you in detail what the plan is, but I would be glad 
to have people at Treasury discuss this with you and offer a 
briefing and have a chance to hear your concerns and 
suggestions.
    Mr. Loudermilk. I think it is going to be imperative for us 
to have a plan going in because, as I said, it should not turn 
into a, ``gotcha,'' enforcement mechanism, to where a guy that 
runs a small carpentry shop, who is more focused on the price 
he is paying for lumber and sheetrock, et cetera, he is trying 
to keep his businesses going, and all of a sudden gets a knock 
on the door from a Federal agent who says, you never told us 
who you are and your ownership. I hope that isn't the direction 
that we are going, but I don't know. I think there needs to be 
a plan going forward, and that Congress is aware of the plan of 
how we are going to let these businesses know of the 
requirements that have been put on them by Congress and by the 
Federal Government to comply with this new law.
    And so, I think there definitely should be a plan moving 
forward because most of these businesses, they don't have 
floors of compliance lawyers, they don't even have a lawyer. 
They are just trying to get by. I also think that there is a 
concern with many of us that the proposed rule's definitions 
of, ``substantial control,'' and, ``ownership interests,'' are 
overly complicated. I think it is going to make it hard to 
apply them consistently across-the-board, especially with 
various-sized businesses. And it is going to compound the 
problem for banks and credit unions if FinCEN uses those same 
definitions in an updated customer due diligence rule. As a 
follow-up question, will Treasury and FinCEN take steps to try 
to simplify these aspects of the rule before it is finalized?
    Secretary Yellen. FinCEN has put out a proposed rule to 
collect the information, and it does wish to minimize the 
burden on entities that are required to report it. There have 
been very significant public comments on the rule, and FinCEN 
will consider them very carefully before trying to finalize a 
rule in this area. This is a very legitimate concern, and one 
that FinCEN needs to carefully work on.
    Mr. Loudermilk. Right. And if I am not mistaken, FinCEN is 
technically a part of the Department of the Treasury. Is that 
correct?
    Secretary Yellen. Yes.
    Mr. Loudermilk. Of which you are the captain at the helm. 
It sounds a little bit like you are deferring them to be an 
independent agency over here, but they do answer to you. Is 
that correct?
    Secretary Yellen. That is correct.
    Mr. Loudermilk. And so, what I am asking is, are you going 
to give direction in these areas to simplify substantial 
controlling ownership interest, or make it such that this 
doesn't turn into an issue where we find potentially millions 
of businesses not in compliance with the law and wondering 
where they are going to go? I am looking for some type of 
direction. I am not hearing there is a plan, and I am not 
hearing that this is the way we are going, and I'm just kind of 
hoping that is the way we go.
    Secretary Yellen. I agree with you. This is a very 
legitimate concern that needs to be addressed, and we will 
address it.
    Mr. Loudermilk. Okay. Thank you.
    Chairwoman Waters. The gentleman's time has expired.
    The gentleman from Florida, Mr. Lawson, is now recognized 
for 5 minutes.
    Mr. Lawson. Thank you, Madam Chairwoman, and thanks for 
having this hearing.
    Secretary Yellen, I am hearing from some small community 
development financial institutions (CDFIs) that they are 
concerned that proposed changes being made by the CDFI Fund 
will make it harder to become certified as a CDFI and access 
the important capital that Congress has been providing them. 
This is especially troubling coming out of a pandemic. Can I 
get a commitment from you today that we will look into this and 
make sure that the Administration and the CDFI Fund will not 
make changes to the certification process for community 
institutions to become CDFIs more difficult?
    Secretary Yellen. We will be happy to discuss this in 
greater detail with you. I am not sure I exactly understand 
what the issue is, but I can have my staff contact you and 
learn more. We are certainly very supportive of CDFIs and want 
to make sure that they can become established and receive all 
the additional funding that Congress has made available. These 
are critical institutions in supporting the provision of 
capital, especially in low-income minority neighborhoods.
    Mr. Lawson. Okay. Thank you, and I look forward to 
receiving that information. Secretary Yellen, I am hearing from 
those representing credit unions that when they apply for CDFI 
funds, some are waiting over 6 months for a status update on a 
decision on their certification as a CDFI. Can you look into 
it, what may be causing the delay in getting timely updates and 
decisions and let us know if this is something that needs 
statutory relief from Congress? Are there other ways that this 
can be addressed?
    Secretary Yellen. We will be glad to work with you on that 
and have a look.
    Mr. Lawson. Okay. Secretary Yellen, with the creation of 
the interagency law enforcement team, how is the information 
that Treasury collects being shared with the task force and 
have you found the creation of the task force useful?
    Secretary Yellen. I'm sorry. The task force on what? I 
didn't quite catch that.
    Mr. Lawson. Have you found the task force useful?
    Secretary Yellen. Which task force?
    Mr. Lawson. I'll tell you what, I say with the Capture, the 
creation of the intelligence law enforcement team.
    Secretary Yellen. I'm sorry. Are you referring to the 
Klepto Task Force?
    Mr. Lawson. Yes, Klepto. Have you found any information to 
be useful?
    Secretary Yellen. The KleptoCapture Task Force, is that 
it??
    Mr. Lawson. Yes, yes.
    Secretary Yellen. This was just recently established by the 
Department of Justice to help us go after oligarchs to make 
sure that we are able to identify and seize their property. And 
I think they have already had notable success in seizing some 
property, and it is going to be an important initiative in 
helping us make sure that sanctions work.
    Mr. Lawson. Okay. With that, Madam Chairwoman, I yield 
back.
    Chairwoman Waters. Thank you very much. The gentleman from 
West Virginia, Mr. Mooney, is now recognized for 5 minutes.
    Mr. Mooney. Thank you, Madam Chairwoman. Secretary Yellen, 
a recent study on Chinese lending by AidData revealed that 
China has established itself as a lender of first resort for 
many low- and middle-income countries. China's lending terms 
are often less generous than those of Western and multilateral 
creditors, yet the Multilateral Development Banks are not 
appealing enough to these countries, so they turn to loans from 
China. China has financed hundreds of billions of dollars in 
development projects around the world in the last 20 years. 
China is not extending their funds to these countries out of 
kindness. They are using their financing to aggressively expand 
their influence around the world. My question is, why is it 
that so many countries take a Chinese loan when financing from 
Multilateral Development Banks is available, and what are you 
doing to change this?
    Secretary Yellen. My sense is that many developing 
countries would much prefer high-standards capacity-building 
MDB loans to Chinese loans. And it is not that they prefer 
Chinese borrowing to MDB borrowing, but that they really want 
to have access to all of the financing that is available to 
them and they use both. We feel very strongly, and this is part 
of the commitment the President made to B3W, Build Back Better 
World, to helping developing countries build infrastructure in 
ways that involve sustainable debt, transparency, and high-
quality lending practices, rather than often-predatory Chinese 
lending practices.
    And I think, to make sure that we have that capacity, we 
need to bolster U.S. leadership in the multilateral system, and 
to make sure that we meet our financial obligations to these 
institutions. So, they need to be adequately resourced, and we 
don't yet have confirmed executive directors, which is also 
important.
    Mr. Mooney. Okay. Thank you for your response to that 
question. As a lead-in to my second question, I like to use our 
current situation with Russia as a good example of why China's 
influence abroad is an important issue, a very important issue. 
In response to its aggression in Ukraine, America responded 
with sanctions that will isolate and weaken Russia. Such a 
response does not work if we act alone. We need other countries 
to join our effort in order to apply more pressure to Vladimir 
Putin and Russia. My concern is that, with China's growing 
influence abroad, it would be more difficult to isolate and 
weaken them in the case of a Chinese military aggression. 
Secretary Yellen, how concerned are you that China's lending 
around the world could interrupt attempts to respond to Chinese 
aggression?
    Secretary Yellen. I would say, generally, I am concerned 
about Chinese lending around the world. As I mentioned, I think 
often, Chinese lending can be predatory and result in 
unsustainable debt and influence on countries, and that I would 
very much like to see the United States and its partners expand 
our lending in ways that diminish China's influence in this 
space. And, of course, it is a way in which China exerts 
influence on many countries that borrow from it, but we need an 
alternative, and we need to finance it and we need a response.
    Mr. Mooney. Thank you. I think in my last minute, I have 
time for one more question. The Chinese Communist Party is 
carrying out what is widely acknowledged as genocide of the 
Uyghurs. And yet only one member of the Politburo has been 
sanctioned pursuant to the Global Magnitsky Act, and that 
individual sanction was during the Trump Administration. Why 
aren't we sanctioning China's top leadership for what they are 
doing to the Uyghurs?
    Secretary Yellen. We have put sanctions on individuals who 
were involved in Xinjiang and the Uyghurs situation. Whom 
exactly to sanction in China is something that is part of 
broader foreign policy concerns that the State Department plays 
an important role in determining. It is not just a matter for 
Treasury.
    Mr. Mooney. Thank you. I would just like to close by saying 
we need to act quickly to stop China's negative influence from 
growing further. Thank you. I yield back.
    Chairwoman Waters. Thank you. The gentleman from New 
Jersey, Mr. Gottheimer, who is also the Vice Chair of our 
Subcommittee on National Security, International Development 
and Monetary Policy, is now recognized for 5 minutes.
    Mr. Gottheimer. Thank you, Madam Chairwoman, and thank you, 
Madam Secretary, for joining us today
    The U.S. faces an increasingly complex series of challenges 
before it between the Russian invasion of Ukraine, competition 
with China, and the continued threat of both homegrown and 
domestic terrorism. It is critical that Congress work together 
in a bipartisan manner to address these issues. The world is 
watching our response to these critical issues before us, and 
it is imperative we act together to demonstrate leadership in 
such areas as stopping the financing of terrorist and ensuring 
the U.S. emerges as a leader in emerging technology.
    Secretary Yellen, the New Jersey Office of Homeland 
Security and Preparedness just released its 2022 Terrorism 
Threat Assessment. The report cited homegrown violent 
extremists, such as those inspired by ISIS and other 
extremists, as the top terrorist threat facing New Jersey 
citizens. What is the Treasury Department doing to combat the 
financing of domestic terrorists, whether the funding comes 
from overseas or from U.S. sources, and is it a major concern 
for you and your work?
    Secretary Yellen. Yes, it certainly is a major concern, and 
we are using sanctions policy and other resources to try to 
address this threat.
    Mr. Gottheimer. Can you speak a little bit about, if you 
would, where do you see gaps? Now that you have been in the job 
for a bit, where do you see gaps in your authority which we 
could help address here in Congress? What would be most helpful 
for you to help fight these threats to our country?
    Secretary Yellen. Generally, we have great powers to impose 
sanctions and to use them under Executive Orders to address 
threats that we see. There may be some discrete areas. I think 
one came up earlier in this hearing about geographical 
targeting, in the case of FinCEN's collection abilities, but we 
can work with you and give you greater detail on areas where it 
might be possible to have our authority bolstered. But, in 
general, we have substantial powers in these areas.
    Mr. Gottheimer. Thank you, and I look forward to working 
with you on that. If I can move on. I have been a strong 
supporter of establishing appropriate guardrails around the 
cryptocurrency space. They will both protect consumers and 
encourage innovation here in the United States. This includes 
my discussion draft, the Stablecoin Innovation and Protection 
Act, which would establish guidelines in issuing qualified 
stablecoins. What I am particularly concerned about is ensuring 
that bad actors are not able to use cryptocurrency of any kind 
to launder money or fund nefarious activities. Can you talk a 
little bit about efforts Treasury is taking to with actors like 
terrorists or Russian oligarchs to prevent them from using 
crypto and avoid sanctions regimes?
    Secretary Yellen. Yes.
    Mr. Gottheimer. I know you talked about this a little, but 
if you can expand on that, I would be grateful. Thank you.
    Secretary Yellen. Sure. We are aware of the possibility 
clearly that crypto could be used as a tool to evade sanctions, 
and we are carefully monitoring to make sure that doesn't 
occur. But I would say we have a good deal of authority in this 
area and are using it and will use it, and it is harder on a 
large scale for an economy to actually use crypto to evade 
sanctions. Even large-scale transactions would become apparent 
by those who regularly examine the blockchain. We would see 
that there were large transactions taking place. Exchanges, 
those who use crypto need to get in and out of it to buy things 
in hard currencies and exchanges are subject to AML/CFT 
regulations. So, they are part of the financial system that is 
subject to those regulations.
    And trying to use crypto on a large scale, we think is 
something that is not easy to do, so it is a channel we are 
worried about. We haven't seen significant evasion through 
crypto so far, but we will monitor carefully and use 
authorities that we do have to make sure that this isn't a 
major avenue for evasion.
    Mr. Gottheimer. In the crypto space, I am hearing from many 
Members of Congress, from those in the space, both consumer 
groups but also, of course, entrepreneurs, and businesses that 
are developing in cryptocurrency. I guess I am out of time, so 
I will yield back.
    Chairwoman Waters. Thank you.
    Mr. Gottheimer. Thank you.
    Chairwoman Waters. The gentleman from Ohio, Mr. Davidson, 
is now recognized for 5 minutes.
    Mr. Davidson. Thank you, Madam Chairwoman, and, Madam 
Secretary, thank you. I appreciate your testimony today. And I 
am just curious, do you believe that pursuing globalization 
through executive policies is aligned with our goals of 
promoting an internationally-competitive environment through 
domestic policy?
    Secretary Yellen. I'm sorry, promoting globalization--
    Mr. Davidson. Globalization.
    Secretary Yellen. Through what?
    Mr. Davidson. Did we sign a treaty or something with Basel? 
Did I miss something, that the Senate affirmed a U.S. treaty 
with some of this international global framework? And the 
reason I ask is just one of the most recent examples is this 
global minimum tax imposed under OECD Pillar Two, and it says 
it would protect national sovereignty. Your rationale seems 
perplexing because I am not sure anyone would think that 
sovereignty is derived from some sort of international 
agreement, particularly on tax policy. And, of course, in our 
Constitution, it says all bills for raising revenue shall 
originate in the House of Representatives. So, what is the 
logic of us submitting to some non-sovereign international 
framework on the tax policy?
    Secretary Yellen. Any change in tax law in the United 
States must be legislated by Congress without question, so 
there is no agreement that imposes any requirements on--
    Mr. Davidson. So just a coordination, kind of like Basel 
isn't binding, but we do implement it and kind of gold plate 
it, for example, not to conflate Basel with tax policy. But 
when you talk about bank regulation, prudential regulation, 
some of the components that are allegedly in these stress tests 
that even Congress isn't allowed access to and the people 
submitting to them aren't allowed to share the results of those 
even to Congress, who wants to determine whether we have the 
right regulatory framework in there. A lot of this is coming 
out of this global cooperation, so what is the nature of that?
    Secretary Yellen. We have a global financial system, and 
for it to be regulated effectively, regulatory systems across 
countries need to be coordinated with one another. And 
supervisors are all asking themselves, what is the best way to 
proceed to have a safe, sound financial system?
    Mr. Davidson. I think my point is that it is not the treaty 
of the United States, and it is not a power that Congress 
delegated, that we shouldn't be able to hear candid answers. 
And so, there are big black holes in terms of what we are able 
to get from this. And I just want to follow up on one area, in 
particular, because I think you are saying something that is 
encouraging here.
    In December, you submitted answers to Senator Toomey in 
response to questions that he submitted for the record. One 
question pertained to draft guidance issued by the Financial 
Action Task Force (FATF). A particular question asked if 
Treasury believed non-custodial services should be subjected to 
money services business registration in light of FATF guidance 
that was issued in the fall. In your answer, you stated that 
the FATF guidance was aligned with prior FinCEN guidance, and 
that neither approach proposed to regulate the technology 
itself. Rather, you asserted that both FATF and FinCEN guidance 
were focused on financial activity. Do you still stand by that 
statement?
    Secretary Yellen. I believe so. I don't know if you have 
something particular in mind that goes against that, but--
    Mr. Davidson. My concern is, picking up on that FinCEN 
guidance, for example, we introduced a bill called the Keep 
Your Coins Act, which protects self-custody. And the reason we 
feel the need to protect it is because Treasury, under 
Secretary Mnuchin, and under your leadership, has proposed to 
enter into a rulemaking that would potentially prohibit self-
custody, or, as the language has been used, self-hosted 
wallets, but it is really self-custody of private property 
without an intermediary.
    And I was really encouraged by your dialogue with Mr. 
Gottheimer there in terms of your view on some of the digital 
asset space, and I know that you have a speech coming up on 
that I think tomorrow. But in light of the President's 
Executive Order, do you believe that it would be fitting for 
Treasury or other components of Treasury, such as the SEC, to 
enter into rulemaking, while we are in the midst of that 
Executive Order?
    Secretary Yellen. To enter into a rulemaking?
    Mr. Davidson. Rulemaking speeches, statements of policy or 
guidance. Should we take those kinds of things as guidance in 
light of the Executive Order?
    Secretary Yellen. The President has issued an Executive 
Order asking his government to examine issues connected with 
digital assets. I am giving a speech tomorrow to describe the 
Executive Order and the approach that we are taking, but in 
most areas, we haven't come out yet with recommendations. An 
exception to that is in the area of stablecoins, where I 
believe my Under Secretary testified to you. The President's 
Working Group is sufficiently concerned about rapid growth and 
did come out with recommendations there.
    Mr. Davidson. Thank you, and I hope Congress will 
participate fully. And my time has expired, so I yield back.
    Chairwoman Waters. The gentleman from Illinois, Mr. Casten, 
who is also the Vice Chair of our Subcommittee on Investor 
Protection, Entrepreneurship, and Capital Markets, is now 
recognized for 5 minutes.
    Mr. Casten. Thank you, Madam Chairwoman, and thank you, 
Secretary Yellen.
    I would like to understand a little bit about the energy 
sanctions that we have on Russia and the potential sanctions 
that we could impose, and I am delighted to see that there 
seems to be some strong bipartisan support for sanctioning 
Russia's oil exports. If I am doing my math right, Russia 
exported about 4.7 million barrels a day last year, the second 
largest producer, 11 million barrels per day production, 
somewhere between 4 and 5.
    Secretary Yellen. I believe they produced about 10 or 11 
million barrels a day.
    Mr. Casten. Total production, but the exports are between 
four and five.
    Secretary Yellen. Something like that, yes.
    Mr. Casten. That is ballpark. We are, of course, a very 
small take of that import.
    Secretary Yellen. Very small.
    Mr. Casten. What I would like to understand is that as we 
are thinking with our NATO allies and others about sanctioning 
of that, let us call it 5, how much realistically can we block 
from the sale in international markets? Can we get the whole 5? 
Can we get half of that? What do we think is the amount of pain 
we could impose on Russia by blocking those exports?
    Secretary Yellen. The United States has banned oil imports.
    Mr. Casten. Sure, but we are, like, half a million barrels 
a day--
    Secretary Yellen. The issue with blocking oil exports from 
Russia is that many countries, especially in Europe, are very 
dependent on that oil, and we are likely to see skyrocketing 
prices if we did put a complete ban on oil. And as I said at 
the outset, our concern has been in designing sanctions. We 
want to impose the maximum pain we can on Russia, but also 
taking care not to impose undue pain on Americans and on our 
partners. We wish we were a lot less dependent on oil than--
    Mr. Casten. I am sympathetic, and I am not trying to ask a 
politically leading question. I am just trying to understand, 
and I realize natural gas is a bit of a different issue with 
Germany's situation. But with respect to oil, I have seen 
ranges of 1 to 3 million barrels a day that the civilized world 
could block, and I am trying to understand because there is a 
big supply/demand balance question on the other side. And I am 
wondering, as we think both about the tools we have to block 
Russia and the global inflationary measures, I don't know how 
to think about that except in saying how many million barrels a 
day are we going to take off the market.
    Secretary Yellen. To the extent that we diminish Russia's 
ability to export oil and force Russia to keep oil in the 
ground, which is occurring to a meaningful extent right now, we 
do want to worry about overall supplies and making sure that 
they are at least roughly adequate. That is why President Biden 
announced a release, a major release, a million barrels a day 
of crude from the Strategic Petroleum Reserve over the next 6 
months in the hope that, an expectation that high prices will 
induce firms in the United States and elsewhere. It is enough 
time to ramp up production. If we are successful with that, it 
might be possible to put tougher restrictions on Russia.
    Mr. Casten. Okay. Maybe we can follow up offline, because 
the concern I have is that if we are looking at 1 to 3 million 
barrels a day of shutdown, there is no country that has the 
ability to ramp that up. And, of course, the Strategic 
Petroleum Reserve is a finite resource. And I think we have a 
lot of things that we could do on the demand side of course, 
right? I am delighted to see the move on heat pumps and things 
we could do to lower oil use, but I am nervous about what is 
there. And I would like us to understand, if we are, on a 
bipartisan basis as we should be committed to reducing Russian 
oil exports, then we need to have a really good visibility on 
what that does to global prices for oil markets and to what 
degree can we reduce our dependency on those through other 
measures.
    Secretary Yellen. Right. The demand for oil is highly 
inelastic in the short run. And so--
    Mr. Casten. As is the supply.
    Secretary Yellen. --too large a restriction on supply could 
have very large price effects. And that is what we are trying 
to balance, that we would ideally like to impose as much pain 
as possible on Russia, but we need to take into account the 
consequences.
    Mr. Casten. Okay. I am out of time, but I will send you a 
question for the record. I really have the same question about 
food, but if I look at wheat production and corn production and 
sunflower oil production, there is the same dynamic there, and 
I would like us to understand how we hurt Russia and understand 
the implications.
    Secretary Yellen. Same basis--
    Chairwoman Waters. The gentleman's time has expired.
    Mr. Casten. Thank you. I yield back.
    Chairwoman Waters. The gentleman from North Carolina, Mr. 
Budd, is now recognized for 5 minutes.
    Mr. Budd. I thank the Chair, and I thank you, Madam 
Secretary, for being here today.
    Considering that one of the topics of discussion today is 
our effort to counter terrorist financing, I would like to 
discuss the fact that the U.S. Government has already sent 
taxpayer money to convicted terrorists. I sent you a letter on 
January 11th regarding the revelation that the convicted Boston 
Marathon bomber had received a $1,400 economic impact payment 
under President Biden's American Rescue Plan. Now, this was 
revealed in court filings in the State of Massachusetts. For 
background, this is a man who planted a bomb at the 2013 Boston 
marathon that killed 3 people, including an 8-year-old boy, and 
he maimed dozens more, and he then went on to murder an MIT 
police officer. And as of July 2021, the IRS found that 560,000 
incarcerated individuals received stimulus checks, which 
totaled $783 million.
    Madam Secretary, my first question is this: Can you provide 
an updated number on how many incarcerated individuals received 
stimulus checks from President Biden's American Rescue Plan?
    Secretary Yellen. Sorry, I don't have that number at my 
fingertips. I believe that the law required it. This wasn't a 
matter of IRS discretion. I believe the IRS followed the law.
    Mr. Budd. Thank you. I want to shift gears just a minute. 
Rather than how many individuals, can you now provide an 
updated amount of Federal tax dollars that were sent to Federal 
prisoners?
    Secretary Yellen. Again, I don't have that. I don't have 
that for you, but this wasn't a discretionary decision by the 
IRS.
    Mr. Budd. From what we know, at least $783 million in 
taxpayer funds have been sent to Federal prisoners, which 
includes murderers, rapists, and terrorists. Madam Secretary, 
does the Biden Administration believe it is acceptable that 
hundreds of millions of dollars, three-quarters of a billion 
dollars of taxpayer money, do you think it is okay with the 
Biden Administration that that goes to Federal prisoners?
    Secretary Yellen. The IRS is carrying out the law, and this 
is a law that Congress passed.
    Mr. Budd. It is very interesting, and I have the yeas and 
nays here from March 6, 2021. It was Cassidy Amendment 1162 on 
the Senate side. It was an amendment over there to block 
Federal money, taxpayer dollars from going to prisoners, but 
every single Senate Democrat last year blocked that amendment 
to the American Rescue Plan that would have prevented these 
payments to prisoners. So, we see that the Biden Administration 
didn't support that, but does the Biden Administration support 
sending taxpayer money to Federal prisoners, like the Boston 
bomber in particular?
    Secretary Yellen. As I said, Treasury is charged with 
carrying out programs that Congress passes, and that is what we 
are doing. And I don't have an opinion to share with you beyond 
saying that--
    Mr. Budd. I understand that, but it seems--
    Secretary Yellen. --we are implementing a law that Congress 
passed.
    Mr. Budd. I am just as confounded as it seems you are at 
this, because with the majority in the Senate side, they had 
the authority to stop it but did not, or if they didn't have 
the authority, why didn't they support the amendment that would 
have given you the authority to send that? The Biden 
Administration, it just seems, was very irresponsible with this 
because they could have prevented this and yet they did not. I 
just want to be very clear with you, Madam Secretary. I do not 
think that Federal prisoners should be getting stimulus checks, 
period. Every taxpayer dollar is sacred and should be treated 
that way, so I strongly urge your Department to do better when 
it comes to safeguarding taxpayer dollars.
    I yield back.
    Chairwoman Waters. The gentlewoman from Iowa, Mrs. Axne, 
who is also the Vice Chair of our Subcommittee on Housing, 
Community Development, and Insurance, is now recognized for 5 
minutes.
    Mrs. Axne. Thank you, Madam Chairwoman, and thank you, 
Secretary Yellen, for being here. It is good to see you today. 
And I want to start out by thanking you so much for helping the 
great State of Iowa get the funds that we needed transferred 
from the State over to Polk County to keep a roof over people's 
heads, and how quickly the Treasury Department responded to the 
request from me and the State to make that happen. It has made 
a big difference, and I really appreciate it.
    Secretary Yellen. Thank you.
    Mrs. Axne. Again, I thank you as well for yesterday's event 
where the President signed the Executive Order and for helping 
us address that family glitch so that a couple hundred thousand 
more Americans can get healthcare coverage and we can lower the 
cost for others. In States like Iowa, that means a world of 
difference, so thank you so much for all you do.
    Secretary Yellen. Thank you for that. We were glad to be 
able to address that.
    Mrs. Axne. Wonderful. Here is the deal. I know a lot of 
people, and you are hearing it today, are very interested in 
how the sanctions are working against Russia. I have heard from 
multiple folks and in briefings, et cetera, that the sanctions 
seem to be working well. But as that is basically one of our 
key tools that we are using right now in this issue, I would 
like to hear more from you if you think that those sanctions 
are working in the way they should, and if they are 
strengthening what we have in place, and if there is any 
suggestions that you also have?
    Secretary Yellen. I do believe the sanctions are having a 
devastating effect on Russia. Russia has become almost 
completely isolated from the international financial system. 
American and foreign firms are leaving Russia. It is losing 
access to goods that Russians who are accustomed to buying are 
being deprived of. The Central Bank of Russia had amassed a war 
chest of reserves of over $600 billion that they counted on to 
be able to deal with the impacts of sanctions on their economy 
and to help financial institutions and firms that were badly 
affected. And our sanctions on the Central Bank, jointly with 
our partners, have deprived them of access to certainly over 
half of that, and another 30 or 35 percent is tied up in gold 
and other forms of wealth that are not highly liquid. So, we 
have really deprived them of access to a war chest that they 
were counting on.
    We have imposed restrictions on exports of a wide range of 
equipment. That is including semiconductors that are critical 
to Russia's ability to continue to build defense in high-
technology sectors. We have sanctioned hundreds of Russian 
oligarchs and members of the Russian government. We have 
sanctioned firms in the defense sector, in the aerospace 
sector. And we continue to work with our allies to put in place 
additional sanctions as Putin ramps up his horrific crimes in 
the Ukraine. Just this morning, we announced that we are 
putting in place full blocking sanctions against Russia's 
largest bank that has over a third of the assets of the Russian 
banking system. We are prohibiting Americans from investing in 
Russia and further sanctioning elites. And this is, I believe, 
going to have a devastating effect on the economy and already 
is doing so.
    Every week, we have put in place new sanctions, working 
closely to coordinate with our partners. We have a huge 
coalition, and countries that have rarely, if ever, imposed 
sanctions, including Switzerland and Singapore, have joined 
with our coalition, and I do believe that they are working.
    Mrs. Axne. Thank you, Secretary Yellen. That was a great 
overview. I did want to talk about the supply chain because of 
the lockdown in China. I am running out of time, but I 
appreciate all of the work you are doing and the update on the 
sanctions. Thank you.
    Chairwoman Waters. Thank you very much. The gentleman from 
Tennessee, Mr. Kustoff, is now recognized for 5 minutes.
    Mr. Kustoff. Thank you, Madam Chairwoman. Thank you for 
calling today's hearing, and thank you, Secretary Yellen, for 
being here today.
    One thing I hear from constituents at home, and I think 
every other Member of Congress hears from their constituents, 
is that everything is expensive. It is just expensive to live 
today, and there are a lot of factors for inflation. I get 
that. I do want to ask you, going back to the American Rescue 
Plan, before we voted on it, Larry Summers, one of your 
predecessors under President Clinton, talked about the package, 
and he said, ``I think this is the least responsible 
macroeconomic policy that we have had in the last 40 years.'' 
He is right, isn't he, Madam Secretary?
    Secretary Yellen. Well, he is not right, and I am sorry, I 
have to differ with his assessment. You have an American 
economy that is enjoying the strongest job market that we have 
had in decades. Americans feel confident of their ability to 
get jobs and to move to better jobs. To think that a year, 2 
years after a pandemic struck our country and unemployment was 
in the double digits, rather than waiting for a decade, as we 
had to, after the financial crisis, to recover the jobs that we 
lost, this country is a enjoying a 3.6 percent unemployment 
rate, and has seen the creation of over 500,000 jobs a month in 
recent months. Americans' financial conditions overall are very 
strong. If you ask the largest banks in the country that keep 
track of checking account balances of their customers at all 
levels of income and wealth--
    Mr. Kustoff. Let me reclaim my time, Madam Secretary. To 
put you on the record, you are saying that people feel good 
about the economy today? The American people feel good about 
the economy?
    Secretary Yellen. They are concerned about inflation, and 
that is entirely understandable, and I am concerned about it. 
And the Administration--
    Mr. Kustoff. Because they are seeing the highest inflation 
that they have seen in 40 years, correct?
    Secretary Yellen. Yes, it is, and it is a significant 
problem that must be dealt with.
    Mr. Kustoff. Let me ask you about this. Yesterday, San 
Francisco Fed President Mary Daly was speaking. She was talking 
about inflation being at a 40-year high, and she said that is 
as harmful as not having a job. She is right about that, isn't 
she?
    Secretary Yellen. Of course, it erodes the ability of 
households to purchase a wide array of goods and services, so, 
yes, it is. But remember that, especially for the lowest-income 
Americans, wage increases have been more rapid than inflation, 
and for pensioners' social security--
    Mr. Kustoff. Reclaiming my time, the wages are not keeping 
up with everyday goods and services, correct?
    Secretary Yellen. For low-income Americans, on average--
    Mr. Kustoff. For every American.
    Secretary Yellen. --that is not true. For low-income 
Americans, their wage gains have exceeded that, and--
    Mr. Kustoff. How about for middle-class Americans, are wage 
gains exceeding the price increases, or are price increases 
exceeding wage gains for middle-class Americans?
    Secretary Yellen. Over the last year, the price increases 
have exceeded the wage gains for middle--
    Mr. Kustoff. Let me ask you about sanctions in my remaining 
time. A big priority of Chairwoman Waters has been sanctions 
against the Russian oligarchs, I think of everybody, and we 
applaud those efforts. As it relates to President Putin, what 
degree of confidence do you have that any of these sanctions 
that we have levied have personally touched him or his assets?
    Secretary Yellen. We have levied sanctions against 
President Putin, and this morning, I believe we levied 
sanctions against his daughters. Look, did all the sanctions, 
including those that we have imposed against him and the threat 
that we told him that we would make this very painful and 
impose sanctions greater than anything any country had ever 
seen, did it deter--
    Mr. Kustoff. Let me ask it another way. Is he feeling the 
effect of the sanctions? Is President Putin feeling the effects 
of the sanctions? Do we have any--
    Secretary Yellen. Is he what?
    Mr. Kustoff. Is President Putin feeling the effects of the 
United States sanctions that have been assessed against him?
    Secretary Yellen. I don't know personally if he is feeling 
them yet, but Russia is certainly feeling the effects of these 
sanctions. And his defense establishment and other critical 
sectors of the Russian economy are absolutely feeling the 
effects of these sanctions as they find it impossible, for 
example, to find the parts that they need to keep their 
automobile factories running and to build their war machine and 
replenish it. Thank you.
    Mr. Kustoff. Madam Chairwoman, I yield back.
    Chairwoman Waters. Thank you. The gentlewoman from New 
York, Mrs. Maloney, who is also the Chair of the House 
Committee on Oversight and Reform, is now recognized for 5 
minutes.
    Mrs. Maloney. Thank you, Chairwoman Waters, and thank you 
so much for being here, Secretary Yellen. As you know, I am 
very focused on Treasury's implementation of my Corporate 
Transparency Act, which will require companies to disclose 
their true beneficial ownership to FinCEN. This was the most 
important, up-to-date, anti-money laundering law in a 
generation, and I believe this should be a top priority of the 
Treasury Department.
    The law gave Treasury 1 year to finalize the rules 
implementing their bill, and that deadline was over 3 months 
ago. So far, Treasury has not finalized any part of the rule 
and has only proposed half of it. This is deeply disappointing, 
especially because the sanctions on Russian oligarchs have 
shown the importance of being able to look behind anonymous 
shell companies to find these bad actors. And as we speak, 
Russian oligarchs are busy moving their money out of our reach, 
and, in some cases, they are likely moving their money into the 
U.S. because they know they can hide it anywhere they want 
anonymously until Treasury finally finishes implementing my 
bill.
    This is not about Treasury having insufficient resources 
either. I have worked with Chairwoman Waters and my colleagues 
on the Appropriations Committee to secure an additional $355 
million for Treasury and FinCEN, which is more than enough to 
write the rule. The second half of the rule, which Treasury 
hasn't even proposed yet, is the most important part because it 
deals with who has access to the beneficial ownership database 
and on what terms.
    Secretary Yellen, will you commit to proposing the access 
rule for the Corporate Transparency Act before the end of the 
month?
    Secretary Yellen. I can't give you a definite promise on 
timing. These are extremely complex rules. There are 
relationships between the two parts of the rule, and they have 
to be coordinated. Treasury has received very extensive 
comments on the first part of the rule that it has to consider 
in preparing the second part of the rule. They are not fully 
separable. So, this is tremendously important legislation. I 
congratulate you and Congress for passing this. It is a 
critically important effort. It is very complex. We have to get 
this right. I can't agree to a deadline. I am not positive when 
we are going to get that out.
    Mrs. Maloney. I will tell you it is critically important, 
especially with what is happening in the world with Ukraine. 
And if you can't commit to the end of the month, when will you 
be proposing the access rule? Can you give us an estimate for 
when we will be able to see this rule?
    Secretary Yellen. Certainly this year, within the coming 
months.
    Mrs. Maloney. Secretary Yellen, my message to you today is 
a very simple one: Please speed up the process for the 
beneficial ownership rulemaking. This is taking far too long, 
and we need action now, not in a few months, but now. We don't 
know who is behind buildings in New York and elsewhere, which 
are just bank accounts. There are no lights in the buildings. 
People don't live there. They are anonymous shell companies. 
And law enforcement wants to know, the public wants to know, 
the Ukrainian people want to know who owns this property, and 
we can't get to it until the rules have been made, and we are 
way, way behind, and it is an emergency.
    Now, I would like to move on to the substance of the rule. 
There are a number of things Treasury could do in the access 
rule to make the beneficial ownership database more usable and 
more effective for law enforcement and others, for example, 
making the forms that companies fill out very clear and easy to 
understand, and having companies submit the information in 
machine-readable format. Open Ownership, which is an internet, 
national non-profit that focuses on beneficial ownership, has a 
number of additional recommendations for Treasury's database.
    Secretary Yellen, what is Treasury doing to ensure that the 
beneficial ownership database is as usable and effective as 
possible for the users of the database?
    Secretary Yellen. It has been a key consideration since the 
outset, and I would be glad to give you a briefing on what 
FinCEN is doing on that front. Thank you.
    Chairwoman Waters. The gentlewoman's time has expired.
    The gentleman from Ohio, Mr. Gonzalez, is now recognized 
for 5 minutes.
    Mr. Gonzalez of Ohio. Thank you, Madam Chairwoman, and 
thank you, Madam Secretary, for being here today.
    I want to jump right into some China, World Bank, debt-trap 
diplomacy questions, if I could. When we think about the 
developing world and how we can help them develop their 
economies responsibly and sustainably, in many instances, 
countries in the developing world are choosing between 
different financing packages. Way too often, they are choosing 
China and the usurious terms that come along with that. From a 
tools standpoint, what do we need, either at the IFIs or the 
DFC, to have more competitive offerings for the developing 
world so that they are choosing our packages over China's, and/
or are we even at the table when these conversations are taking 
place?
    Secretary Yellen. I think we need the Multilateral 
Development Banks to be adequately financed so they have the 
capacity to offer sufficient financing. There is an enormous 
need for infrastructure investment throughout the developing 
world. Countries are starved for the resources, and many don't 
have access to private capital markets.
    Mr. Gonzalez of Ohio. Just to interrupt quickly, is it your 
contention that these banks are not funded appropriately, like 
the World Bank, the IMF? They do not have adequate capital to 
make competitive offerings, is that what you are suggesting?
    Secretary Yellen. In some cases, they are adequately 
funded. In other cases, there probably is a need for additional 
resources. We ourselves are in arrears, substantial arrears, in 
terms of meeting our own commitments and in terms of trying to 
generate new commitments. For example, we feel very strongly 
that the IMF's new Resilience and Sustainability Trust can make 
an important contribution to energy security and to pandemic 
preparedness, and Congress hasn't given us the authority to 
lend money to that. If the United States wins, we believe it 
could catalyze $100 billion from a group of countries.
    Mr. Gonzalez of Ohio. Got it. One of the issues I have been 
working on since I got here is Chinese influence at the IFIs, 
in particular, the World Bank, where when I have spoken to 
previous executive directors of both parties, what you often 
hear is that China has essentially bought their influence or 
they have more or less bought their votes in various ways, and 
it makes it very difficult to defeat anything that China wants. 
And as a response, one of the things that I introduced and it 
was signed into law was the Accountability for World Bank Loans 
to China Act. This law has various reporting requirements but 
also requires the Treasury Department to advocate for a prompt 
end to World Bank loans to China. China historically blocks 
that.
    According to Treasury, there has been low progress on this 
front. Why has there been low progress, and what should we do? 
And do you personally believe China should graduate from the 
loan program at the World Bank?
    Secretary Yellen. Do I what?
    Mr. Gonzalez of Ohio. Do you personally believe China 
should graduate from the loan program?
    Secretary Yellen. I absolutely do, and we have advocated 
for it very strongly.
    Mr. Gonzalez of Ohio. Thank you. Another provision within 
the enacted legislation is a report to this committee on the 
indebtedness of countries to China through the Belt and Road 
Initiative, as well as the U.S. effectiveness in promoting debt 
transparency at the IMF and the World Bank. In your estimation, 
how effectively are we countering China's efforts to engage in 
debt trap diplomacy, and how transparent are they, or how have 
we done in terms of getting the transparency we need to report 
to this committee?
    Secretary Yellen. Transparency is very important. It is a 
focus of both the IMF and the World Bank, and they have taken 
steps. We all have to try to increase transparency, especially 
of China's lending to these countries, and we are not where we 
need to be on this. China agreed to participate in the common 
framework for countries with unsustainable debt, and hasn't 
really fully met its obligations there either, and so all of 
these are frustrations.
    Mr. Gonzalez of Ohio. Thank you. Quickly, I only have 20 
seconds left, and I just want to get you back on the record on 
something. You mentioned that at present, there is no evidence 
that the cryptocurrency markets are being used in major ways by 
the Russians to evade sanctions or launder money related to the 
Ukraine crisis. Would you just reconfirm that that is in fact 
what you said?
    Secretary Yellen. We have not seen major use of crypto as a 
way of evading sanctions. We will be on the lookout for it. It 
is early days, but we have not seen that yet.
    Mr. Gonzalez of Ohio. Thank you. I yield back.
    Chairwoman Waters. Thank you. The gentlewoman from 
Massachusetts, Ms. Pressley, who is also the Vice Chair of our 
Subcommittee on Consumer Protection and Financial Institutions, 
is now recognized for 5 minutes.
    Ms. Pressley. Thank you, Madam Chairwoman. The IMF's 
surcharge policy imposes extra, often hidden fees onto 
countries with high levels of debt and has been widely 
denounced by development experts and civil society 
organizations as an unjust burden and a hindrance to our global 
economic recovery. Secretary Yellen, these fees are coming at 
the worst possible moment, when countries are in the midst of a 
deadly global pandemic and in desperate need of humanitarian 
assistance and public health services. Are you worried that the 
IMF may be undermining the financial welfare stability of the 
very places we are trying to support?
    Secretary Yellen. I am supportive of the framework that 
includes IMF surcharges. They are part of the IMF's risk 
mitigation framework. And I see them as critical to protect the 
IMF's resources and really making sure that they can play a 
critical role as a global lender of last resort. We are going 
to rely on the Multilateral Development Banks and the IMF to 
provide more resources because of the Russian invasion of 
Ukraine, and we need to make sure that the proper mechanisms 
are in place, and I think that these surcharges should remain 
in place.
    Ms. Pressley. Secretary Yellen, respectfully, I disagree, 
as do 17 other congressional colleagues who sent a letter to 
you, urging you to reconsider in January. In 2009, even before 
the pandemic struck, 64 countries spent more resources 
servicing foreign debts than they did on healthcare 
expenditures for their citizens.
    Okay, moving on, given that Egypt and Armenia have 
vaccinated less than 50 percent of their population, is it fair 
to say that the money these countries are paying in surcharge 
fees would be better spent on, say, vaccinating their people or 
addressing poverty?
    Secretary Yellen. Clearly, there are many countries that 
require resources to address the pandemic, to address downturns 
in their economy and the adverse impacts of the economy and of 
the current global situation. And the IMF, and the World Bank, 
and other MDBs are providing those resources that are very much 
needed. So, I think this surcharge issue is separate and is a 
risk mitigation, a policy that is appropriate.
    Ms. Pressley. I think the detrimental impacts of these fees 
and its governments' abilities to effectively combat the 
pandemic is not really up for debate. But since you are not 
willing to go on record in saying that you would suspend these 
fees, would you at least be willing to go on record and say 
that you would review this surcharge policy, at least a review 
of it, some consideration, given the detrimental impacts?
    Secretary Yellen. We can look at it, and meet with you to 
discuss this issue, if that would be helpful.
    Ms. Pressley. Absolutely. I look forward to that, and we 
will follow up. Thank you, Madam Secretary. And we have to do 
everything in our power to end the global pandemic, including 
eliminating surcharges. Thank you. I yield.
    Chairwoman Waters. Thank you. The gentlelady yields back.
    I would now like to thank Secretary Yellen for her 
testimony today.
    The Chair notes that some Members may have additional 
questions for this witness, 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 this witness and to place her 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.
    With that, this hearing is adjourned.
    [Whereupon, at 1:02 p.m., the hearing was adjourned.]

                            A P P E N D I X
                            

                             April 6, 2022
                             
                             
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