Financial Innovation Caucus

Floor Speech

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Ms. LUMMIS. Mr. President, I am excited to announce the founding of the Senate Financial Innovation Caucus with my friend and cochair, the Senator from Arizona. I am delighted that you also have joined our caucus. We are grateful for your participation and look forward to working with you.

One of my top priorities and a legacy I hope to leave in this Chamber is to ensure the United States remains a global leader in financial services for future generations.

The U.S. dollar is the world's unquestioned reserve currency. Since the Second World War, this leadership role has given our country enormous advantages, including affordable credit and trade finance. China is not hiding its ambition to knock the U.S. dollar down a peg by offering a competitor payment system that sidesteps the United States.

This year, the Chinese Government launched a pilot program for their digital yuan in multiple cities around China. They expect to completely release the central bank digital currency at the 2022 Winter Olympics.

A video released by China state-controlled media in December of 2020 openly stated that the digital yuan will allow China to ``actively participate in reforming world economic governance'' and is ``one of the building blocks of China's move toward world market status and greater involvement in setting the framework of the global economy.''

China does not share the same values as our country relating to fair competition. This chilling reality is one of the many reasons the United States must advance financial innovation and do so now. China is serious about the future. Chinese President Xi stated in 2018 that financial innovation is ``the new industrial revolution.''

In another part of the world, digital assets are protecting many Venezuelans during their current economic crisis and ensuring corrupt government officials cannot seize or devalue their hard-earned savings. The U.S. Government is also using digital assets to achieve its foreign policy objectives and to provide humanitarian aid to Venezuelan groups faster than traditional channels.

We must work hard today to ensure the next generation of Americans can enjoy the opportunity and prosperity made possible by responsible innovation. Failure to do so could have astronomical impacts on the freedoms and privileges that are essential to the American dream.

I have been encouraged by early signs from the Biden administration that they understand the existential threat of China and the promise of financial innovation. China's moves alone should create a sense of urgency in this Chamber to take action.

But it is not just a threat from China that should motivate us. In addition to protecting the U.S. position as the world leader in the financial system, proper regulations for financial innovation will have lasting effects in the financial industry in several ways, notably financial inclusion and entrepreneurship because financial innovation encompasses topics as diverse as faster payment and equities settlement, central bank digital currencies, financial inclusion, digital assets, distributed ledger technology, consumer protection, artificial intelligence, and machine learning. This area has remained bipartisan, following in the tradition of many other financial service issues.

The Financial Innovation Caucus is rigorously committed to the tradition of bipartisanship and will create a lasting legacy by doing so. Innovation is core to the American identity, and innovation isn't confined to one party. Our job here is to create a framework that allows innovation to take root. Regulatory certainty fosters entrepreneurial innovation. A lack of regulatory clarity, on the flip side, strangles regulation, restrains entrepreneurship.

In many cases, financial innovators are simply hungry to know the rules of the road and how they fit into existing law. We need a right- sized regulatory framework for financial technology that both enables new market opportunities and emphasizes consumer protection. The innovator too often loses when competing against business giants with lobbying arms. Together, we can craft regulations that foster innovation, not stifle or unnecessarily direct it.

We also need a new consumer protection framework for emerging tech, which promotes access and innovation but ensures appropriate guardrails are in place.

Innovators are the lifeblood of America. Each new idea strengthens our future. Innovators have done hard work in coming up with ideas which will bring underserved populations into the financial system, reduce systemic risk, and strengthen our competitive nature on the global stage.

Yet there is only so much innovators can accomplish due to our maze of financial regulations. American innovators need clear rules of the road so they can responsibly turn innovation into reality. It is our obligation as government officials to create a framework that clearly enables responsible innovation rather than stifling it. We must do a great deal more in the coming years to clarify and modernize our financial laws.

Citibank, Goldman Sachs, Avanti Bank and Trust, State Street, Deutsche Bank, Kraken, and other large financial institutions are now doing much more than dipping their toes into this realm. They are diving into the financial technology and digital asset markets. Financial innovation is here to stay. Younger generations are turning to and prioritizing technology for their investments.

In February, CNBC reported that there may be as many as 100,000 millionaires from the appreciation of digital assets like Bitcoin. These technologies, if harnessed wisely, see no color, no creed, and no sex

But financial innovation is not limited to regulating digital assets. This caucus will also focus on issues like faster payments, including a U.S. central bank digital currency and FedNow, which have real potential to allow all Americans to receive their paychecks instantly.

The lack of real-time payments costs disadvantaged Americans millions in overdraft fees each year and would reduce many Americans' reliance on high-interest loans. It also traps large amounts of capital for companies, which could be deployed more productively. Tackling these issues will help bring millions of unbanked or underbanked Americans into our financial system.

In Wyoming, we live by the doctrine that you have to pull yourself up by your bootstraps. What you earn is a direct result of your hard work. All Americans should have access to their hard-earned money and investments whenever they would like. We can and should use innovation technologies to reduce settlement times in our payment networks and capital markets and to reduce systemic risk and improve transparency.

Threats to the world economic system, coupled with the benefits financial innovation can create, is why, today, alongside many of my colleagues from both parties, we are founding the Senate Financial Innovation Caucus. The caucus is a bipartisan group committed to promoting responsible innovation to help the U.S. financial industry truly meet 21st century challenges of a globally interconnected economy and to harvest technology to make markets more inclusive, vibrant, and safe for all Americans. After all, our financial innovation is critical in our pursuit to ensure equal access to financial institutions and opportunities.

It is my hope that the work done by the Financial Innovation Caucus will deliver comprehensive legislation to clarify, regulate, and protect America's edge in the financial industry when it comes to innovation. We live in a digital world. Technology is now engrained in our everyday lives. Our lives should reflect this shift and should not hinder innovation. Only together can we secure the U.S. role in the future of finance. So let's go to work.

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