There are many open questions surrounding central bank digital currencies, CUNA wrote to the House Financial Services Committee Thursday for its hearing on CBDCs. A Federal Reserve discussion paper defines CBDCs as “a digital liability of a central bank that is widely available to the general public,” analogous to a digital form of paper money.

“We believe that a focused enunciation of the issues to be solved through a CBDC, and a more refined outline of the proposed design, is necessary before a substantive dialogue among stakeholders is possible,” the letter reads. This conversation will be iterative and an extended process; however, we are concerned that under several scenarios, the creation of a CBDC could significantly worsen the provision of financial services.

The additive value of a CBDC must be carefully weighed against these risks, and the process should not proceed without a clear purpose that mitigates these threats,” it adds. “The creation of a CBDC deserves serious and exacting consideration and implementation should not proceed without Congressional authorization.”

Specific concerns include the impact on the financial system, costs to implement a CBDC, and uncertainty about the goals of developing a CDBC.

CUNA also sent a joint letter with other financial services trade organizations noting the lack of a “compelling case” for a CBDC in the U.S.

“Proponents of CBDC cite a number of laudable goals in support of a CBDC, such as increasing financial inclusion and promoting the U.S. dollar’s international role as a reserve currency and a medium of exchange for international trade,” the letter reads. “The joint trades support these important goals; however, we do not believe that a CBDC is well-positioned to accomplish them.”

Thursday’s letters to the committee follow CUNA’s letter to the Federal Reserve sent last week in response to a discussion paper on CBDCs.