Maintaining US dollar’s preeminence is key to national security

Since the Bretton Woods Agreement established the United States dollar as the global reserve currency in 1944, American companies and workers have benefitted from the United States’ unmatched financial influence on the global economy. Now with technological advances, new developments within the payments arena, and Chinese Communist Party’s (CCP) rollout of their central bank digital currency (CDBC), the dollar’s preeminence is under long term attack. When compared to the dollar, the Chinese renminbi accounts for only a fraction of global usage, but the CCP’s progress with the development of a digital yuan could pose a threat to the U.S. dollar — which is exactly why we recently introduced the bipartisan 21st Century Dollar Act. 

This legislation requires the Treasury and the Federal Reserve (Fed) to implement a strategy to ensure the dollar remains the primary global reserve currency. It requires these agencies to address the threats posed by nations who use their currency with manipulative and malign intent. Congress and policy makers need to understand that economic security is national security. Our strategic partners worldwide need confidence that they can trust that the U.S. dollar and currency system will not seek to cheat them, like the CCP’s renminbi does.

Despite Chinese claims that they have no interest in promoting the renminbi as an alternative global reserve currency or in challenging the strong financial leadership of the United States, the CCP has frequently exposed their expansionist mindset through their territorial claims in the South China Sea and predatory lending like the Belt and Road Initiative in Africa and Asia. If America’s global influence is weakened, the CCP could exert their influence in pursuit of their own objectives — which could prove to be even more alarming than their currently harmful practices.

Therefore, the United States needs to ensure that countries around the globe can put their full faith and trust in the U.S. dollar. A potential devaluation of the U.S. dollar in foreign exchanges could jeopardize global monetary and economic security. This threat is only worsened when the counter currency (i.e. the renminbi) is not based on a free and open economic standard, or the rule of law, as the levers of currency control can be easily manipulated by the CCP.

It is imperative that we accomplish this mission on a bipartisan basis — which is why we’re pleased to work together on this. Maintaining the U.S. dollar as the primary global reserve currency must remain a U.S. national security priority and part of a coordinated effort to combat China. Former officials like Bob Hormats and Keith Krach — previous undersecretaries at the Department of State for President Obama and President Trump, respectively — both worked tirelessly through each administration, even though they were on different sides of the aisle, to ensure the U.S. economic and national security interests remain protected to counter the growing risk posed by the CCP. They have been instrumental partners throughout this process, and we look forward to continuing to work with them as we protect the United States’ strong financial interests.

Passing the 21st Century Dollar Act will serve as an important step towards preserving the American ideals of freedom and fairness on the international economic stage, confront economic and national threats posed by China, and safeguard the dollar-based reserve system that has encouraged the economic prosperity seen over the past 75 years. 

Hill represents the 2nd District of Arkansas and is a member of the Financial Services Committee. Himes represents Connecticut’s 4th District and is chair of the National Security, International Development and Monetary Policy Subcommittee of the House Financial Services Committee.