During yesterday’s Senate Finance Committee confirmation hearing for Scott Bessent, Trump’s nominee for Treasury Secretary, the topic of cryptocurrency barely came up. However, the one mention it received related to anti money laundering (AML). He confirmed he does not see the need for a U.S. central bank digital currency (CBDC) and is in favor of the independence of the Federal Reserve.

On the topic of AML, Democrat Senator Ben Luján asked whether Congress will have more transparency over suspicious activity reports at FinCEN. Mr Bessent replied, “There is a sleeve of Treasury called TFI, terrorism finance, that deals with this within FinCEN. And I believe that we have to have a 2025 approach to – as you and I talked about – digital currencies and all branches of government. So yes.”

Senator Blackburn quizzed Mr Bessent on CBDC, to which he responded that he sees “no reason” to launch a CBDC. He argued that in other countries, there may be fewer options for parking cash.

There’s been some media coverage that President Trump wants to be involved in Federal Reserve decisions. When asked, Mr Bessent said, “I think on monetary policy decisions the FOMC (Federal Open Market Committee) should be independent.” While this is a supportive statement, we’d note the caveat ‘on monetary policy decisions‘.

The incoming Treasury Secretary said he believes Mr Trump’s comments on the Fed may have been misconstrued in a “highly inaccurate Wall Street Journal article”. His gist is that Mr Trump is entitled to express his opinion on where he’d like to see rates, as various Senators do from time to time.

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This coming Monday’s Eurogroup meeting will include a discussion about tokenization, DLT and central bank money for wholesale settlement, as well as the status of the retail digital euro. The Eurogroup is an informal body of economic and finance ministers that meet to discuss issues relating to the euro currency.

Mr Hyun Song Shin, economic adviser and head of the monetary and economic department at the Bank for International Settlements (BIS) will take part in the discussion. He is involved in Project Agorá, the BIS project to combine tokenization and wholesale CBDC to speed up cross border payments using correspondent banking. It involves 41 institutions plus seven central banks, including the Banque de France as the EU representative.

During the recent Eurosystem wholesale DLT settlement trials that ended in November, the French central bank’s wholesale CBDC (wCBDC) or ‘exploratory cash tokens’  was one of three settlement solutions used for DLT-based transactions, but the only wCBDC. The Deutsche Bundesbank’s Trigger solution proved the most popular, perhaps reflecting the country’s more advanced development of tokenization given supporting laws. This year the Bundesbank has posted more ads to hire DLT staff.

Industry participants requested that some form of settlement tools remain available after the trials, in order to avoid losing momentum. In response, the ECB said it would discuss the lessons learned this month and explore next steps. According to the ECB, 64 institutions took part in over 40 trials (real money) and experiments (simulations), one of the largest tokenization initiatives in the world to date.

Innovation looms large on economic agenda

These specific innovation topics are not the only ones to be discussed. The meeting will cover European Commission recommendations for economic policy in the euro area. The Commission paper refers to the Euro area’s “stagnant productivity, limited innovation and limited diffusion of digital technologies.”

It continues, “developing capacities in strategic digital technologies and
exploiting our strengths are crucial to reinforcing EU technological sovereignty and
resilience and maintaining our open strategic autonomy.”

Hence, advancing wholesale DLT settlement options seems like a good place to start.

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