| | | | |  | | By Zachary Warmbrodt | | | Editor’s note: Morning Money is a free version of POLITICO Pro Financial Services morning newsletter, which is delivered to our subscribers each morning at 5:15 a.m. The POLITICO Pro platform combines the news you need with tools you can use to take action on the day’s biggest stories. Act on the news with POLITICO Pro.
| | MM has an early peek at some revealing new data on a thorny financial policy issue: The rise of central bank digital currencies. The Atlantic Council is out with fresh findings on the adoption of CBDCs around the globe. The headline number is that 68 countries are developing, piloting or launching a CBDC, a new high since the group started tracking the projects four years ago. What explains the momentum? “They’re learning from each other,” said Josh Lipsky, Atlantic Council GeoEconomics Center senior director. “As more and more countries do it, as they communicate, as they share best practices, this generates innovation because you don’t have to do this all from scratch.” A big takeaway from the data is that the world may be leaving the U.S. behind. Adoption of a CBDC here faces huge political obstacles on the right amid fears of government surveillance and lobbying by private crypto firms. The Atlantic Council says progress on a U.S. “retail” CBDC, a product that could be used directly by households and nonfinancial businesses, has stalled. Federal Reserve experimentation with a wholesale CBDC, one that would mainly be used by financial intermediaries like banks, is underway but hasn’t gotten a major status update in several months. Fed Chair Jerome Powell reiterated to lawmakers last week that the central bank wouldn’t proceed without their authorization and that it’s not “remotely close” to issuing a digital currency. A few stats to give you a snapshot of global developments: — The number of CBDC pilot programs has hit a new high of 36, including the digital euro. All BRICS member states are in the CBDC pilot stage. — Since Russia’s invasion of Ukraine unleashed sanctions tied to dollars and euros, wholesale CBDC developments have doubled. It's a potential sign of interest in creating alternative cross-border payments pathways. Among the 13 cross-border wholesale CBDC efforts is the mBridge project, which connects China, Thailand, the UAE and Hong Kong. It will expand to 11 more countries this year. — China’s digital yuan is still the largest CBDC pilot, reaching 260 million wallets across 25 cities, as well as usage in things like oil and precious metals sales. The uptake may be low on the retail CBDC side but Ananya Kumar, associate director at the GeoEconomics Center, says it’s “more about figuring out the use cases right now than it is about getting people to use it.” So what? “It’s possible that a more fractured payment system gets built up around the world so you have blocs of countries transmitting cross-border currency with each other,” Lipsky said. “It could be a risk to U.S. national security. Think of sanctions evasion possibly. It could be a risk to dollar dominance in the long-term if the dollar is not at the center of these cross-border payments.” “Think about the situation in 2028-29,” he added. “It seems very plausible to me you'll have China, Japan, the euro area, the UK all with CBDCs and the U.S. not.” It’s Thursday — Send tips to zwarmbrodt@politico.com.
| | | | A message from Coalition to Preserve American Jobs: Employers devastated by the pandemic could be thrown another curveball. Congress reauthorized the Employee Retention Credit (ERC) program several times since the start of the pandemic in 2020. Employers who kept their doors open and employees on payroll deserve to have their claims processed. High inflation and higher operating costs continue to strain businesses who are still in recovery mode. Stand with job creators and tell Congress to hold the line. | | | | | February PPI is released at 8:30 a.m. First in MM No. 1: Black leadership groups press for Treasury pick — A coalition including the Joint Center for Political and Economic Studies, the NAACP and the National Urban League is urging the White House to nominate CFTC Commissioner Kristin Johnson for a key Treasury Department post, in part to boost diversity among economic policy positions. POLITICO reported last month that Johnson, a lawyer and former academic who has also worked in the finance industry, was in the running to be Treasury’s assistant secretary for financial institutions. The position is focused on banking and insurance. In a letter to the White House Wednesday, the groups said they strongly support Johnson while noting that Black people have been “woefully underrepresented” in top economic policy roles across all administrations. The organizations that signed the letter also included the Black Economic Alliance, the Diverse Asset Managers Initiative and the National Bankers Association. Dedrick Asante-Muhammad, the Joint Center’s president, told MM that the effort “is an example of how civil rights groups are increasingly coming together to rally around the importance of what previously were thought of as bureaucratic roles removed from the day to day struggles of people of color.” The White House and Treasury declined to comment. First in MM No. 2: Sinema aide to BPI — Michael Wong, who has worked as an aide to Sen. Kyrsten Sinema for more than a decade, is joining the Bank Policy Institute as senior vice president of government affairs starting April 8. “I know he will bring the drive and commitment to finding solutions that made him successful on Capitol Hill to the Bank Policy Institute, and I wish him continued success in his new role,” Sinema said in a statement. Biden to question U.S. Steel deal — The FT reports that President Joe Biden will issue a statement expressing serious concern about Nippon Steel’s takeover of U.S. Steel. The White House has privately informed the Japanese government of the president’s decision. (Pennsylvania, where U.S. Steel is based, is a swing state in the presidential election.) Good news for Biden? — A USA TODAY/Suffolk University Poll showed former President Donald Trump edging out Biden in a near-tie but found that views of the economy have rebounded to the most optimistic level since Biden’s first year in office.
| | | | JOIN US ON 3/21 FOR A TALK ON FINANCIAL LITERACY: Americans from all communities should be able to save, build wealth, and escape generational poverty, but doing so requires financial literacy. How can government and industry ensure access to digital financial tools to help all Americans achieve this? Join POLITICO on March 21 as we explore how Congress, regulators, financial institutions and nonprofits are working to improve financial literacy education for all. REGISTER HERE. | | | | | | | | Treasury updates Congress on crypto, Hamas — In a new letter to Senate Banking Chair Sherrod Brown, Deputy Treasury Secretary Wally Adeyemo warned of continuing concerns about the extent to which Hamas and other terrorist groups will turn to digital currency for financing. On Tuesday, Adeymo sent Brown a FinCEN analysis indicating that between January 2020 and October 2023 financial institutions reported around $165 million in potentially suspicious activity related to Hamas and virtual assets. He said in the letter, obtained by POLITICO, that it involved the potential use of more than 200 unique digital asset addresses. But Adeyemo added that there is still a “great deal we do not know,” given that the reporting firms may have attributed to Hamas the full value of a customer’s transactions, including fiat and digital assets. Adeyemo has been pitching the Hill on expanding Treasury’s authority to police digital assets and did so again in the letter this week. “I know that my team has been discussing these proposals with committee staff,” he said. “I hope that we can work together to translate the proposals into legislative text and, ultimately, into new authorities that we can use to protect our national security and the U.S. financial system.” New Elizabeth Warren-Coinbase drama — CoinDesk reports that the crypto exchange deleted a webpage that promoted a meme coin attacking the Massachusetts senator, one of Capitol Hill’s leading crypto critics. "These pages are automatically generated based on tokens that have been created by third parties," a Coinbase spokesperson said.
| | | | A message from Coalition to Preserve American Jobs:   | | | | | Sierra Club sues the SEC — The environmental group said in a lawsuit that the agency’s new climate disclosure rule threatens to leave investors in the dark, Lesley Clark and Declan Harty report. At least four other legal challenges have been filed by Republican-led states, energy companies and their allies.
| | Romney drafts pro-ILC coalition — Utah Sen. Mitt Romney and 11 other senators are urging the FDIC to treat so-called industrial loan companies fairly and avoid “needless bureaucratic delays” when processing ILC deposit insurance applications. State-based ILC charters allow non-financial firms to establish banking units. Romney made the request to the FDIC in a letter that was also signed by Sens. Catherine Cortez Masto, Susan Collins, Kyrsten Sinema and Debbie Stabenow. First in MM: New FTC scrutiny — House Small Business Chair Roger Williams is leading a letter today that presses the FTC for details on how it drafted restrictions on non-compete clauses, citing concerns about the impact on smaller employers. Republican Reps. Dan Meuser, Jake Ellzey and Aaron Bean signed on to the request.
| | | CFPB vs. the Chamber — Per Katy O’Donnell, the CFPB is accusing the U.S. Chamber of Commerce of “transparent forum shopping” in response to the trade group’s lawsuit targeting the bureau’s new $8 cap on credit card late fees. The Chamber and banking groups filed the suit in the Northern District of Texas. In its response, the CFPB pointed out that the rule applies only to credit card issuers with at least 1 million customers — between 30 and 35 companies – and said “plaintiffs have not identified a single one that is based in this District.” “Instead, in what appears to be transparent forum shopping by primarily Washington lobbying groups seeking to halt a consumer protection rule for every American, the Plaintiffs include only one group that calls this District home, the Fort Worth Chamber of Commerce,” CFPB lawyers wrote in a brief filed Tuesday. “But the Fort Worth Chamber sues on behalf of a Utah bank, which seems to have only recently joined the local chamber (and, indeed, may have not joined at all).” The Chamber didn’t immediately respond to a request for comment.
| | | | Easily connect with the right N.Y. State influencers and foster the right relationships to champion your policy priorities. POLITICO Pro. Inside New York. Learn more. | | | | | | | | Yellen sees relief coming in housing, inflation — Per Bloomberg, Treasury Secretary Janet Yellen said during a Fox Business interview that she expects rising housing costs to moderate and help lower inflation this year. First in MM: A playbook for women and the economy — The Center for American Progress today will release policy recommendations for improving women’s economic standing. The ideas include raising the minimum wage to $17 per hour, guaranteeing comprehensive paid family and medical leave and sick time, increasing abortion access and expanding immigration pathways.
| | | | A message from Coalition to Preserve American Jobs: Business owners like Gil Bonafiz were just trying to make a honest living. COVID-19 and subsequent shutdowns devastated many small businesses. For Gil, a fourth-generation Tex-Mex restaurant owner, saw his revenues diminish in 2020 as a result of the pandemic. A Paycheck Protection Program loan barely got him through to make ends meet. Then, in 2023, a fellow restaurant owner told him about the Employee Retention Credit (ERC) program. Gil applied but delays at the IRS prevented him from receiving funds in time. His months long wait meant he couldn’t keep his doors open. Gil’s restaurant went out of business and his employees lost their jobs. This is outcome the ERC was created to prevent. Don’t let there be more Gils. The Coalition to Preserve American Jobs opposes any continuation of the IRS’ ongoing hold on the processing of the ERC claims. | | | | | | | Follow us on Twitter | | | | Follow us | | | | |
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