Financial Services Reviews the State of the International Financial system
Tuesday, the House Committee on Financial Services, led by Chairman French Hill (AR-02), hosted Treasury Secretary Scott Bessent for a hearing entitled, “The Annual Testimony of the Secretary of the Treasury on the State of the International Financial System.”
Watch today’s full committee hearing here.
On America’s Competitiveness and Influence on International Financial Institutions:
Chairman Hill said, “The United States plays a central role in shaping the international financial system. That influence reflects the global importance of the U.S. dollar, the size and depth of U.S. financial markets, and our longstanding role in critical institutions such as the International Monetary Fund and the World Bank... We must ensure these institutions remain focused on their core missions, operate transparently, and use their resources wisely, consistent with that core mission.”
Subcommittee on National Security, Illicit Finance, and International Financial Institutions Chairman Warren Davidson (OH-08) said, “I was in manufacturing before I came to Congress, and we weren't competing against other companies. We were competing against a foreign government that had decided they would own and dominate other industries. It was disadvantaging American companies. Frankly, the Trump administration has taken aim at why would we confront people like China? Well, because they're taking America for granted. They're assuming Xi Jinping is going to be in charge in China longer than President Trump is going to maintain the resolve, not just in his administration, but going forward to counter China.”
Homeland Security Committee Chairman Andrew Garbarino (NY-02) said, “Under U.S. generally accepted accounting principles, clearers are treated as agents rather than principals, meaning client-cleared trades typically do not come onto the cleared balance sheet. Many U.S. broker-dealers that are subsidiaries of foreign parent companies must also comply with the International Financial Reporting Standards, or IFRS, which has not made the same clarification. Absent IFRS guidance, those firms could be required to carry cleared trades on their balance sheets, significantly impairing their ability to participate in the Treasury market. I'm concerned that excluding major market participants because of accounting inconsistency could restrict Treasury market liquidity and run counter to the goal of the Treasury clearing mandate. We do not want international standard-setting bodies hindering the successful implementation of our Treasury clearing efforts.”
Rep. Scott Fitzgerald (WI-05) said, “The IMF is supposed to promote, obviously, global financial stability. But, it appears, kind of on a regular basis, China continues to use opaque lending practices; they manage the exchange rate, and they're certainly delaying debt restructuring, I guess you would call it, in developing countries.”
On Artificial Intelligence and Financial Technology:
Full Committee Vice Chairman Bill Huizenga (MI-04) said, “As soon as the news of Mythos came out, I gathered the largest banks that happened to be in DC at Treasury to begin discussing this. The largest banks have very good cybersecurity resilience, and they have been very helpful in terms of creating more resilience. And that is moving down the capitalization chain from super regionals to regionals to small and community banks. And then we are populating that out into the service providers.”
Rep. Mike Lawler (NY-17) questioned Secretary Bessent on the Treasury’s efforts to create baseline standards for AI developers, to which he replied: “… this began back in March, and we have engaged on a daily, weekly, and monthly basis. We began with the largest banks and with their Chief Information Officers with their leadership, and we have transferred much of that into Project Gold Eagle, which is a clearinghouse for everything that we learn about resiliency within this. And we continue to engage with them. And I can tell you that the financial sector — from the largest banks to the smallest banks, from domestic banks to international banks — have been very good partners and they are working on resiliency.”
Rep. Zach Nunn (IA-03) said, “[The Financial Services Committee has] led in both crypto. We’ve led in digital assets, including stablecoins. And now we’re looking at this artificial intelligence that has exploded in the last year alone. Our Committee has passed my AI PLAN Act unanimously, to be able to identify ways that the federal government can learn from what’s happening in the private sector, while at the same time not putting prohibitive restrictions on innovation here in the United States.”
Secretary Bessent echoed his support for the work of the Committee:
Treasury Secretary Bessent said, “I am also pleased that we reached consensus from economies representing more than two-thirds of global GDP to address excessive and persistent imbalances, advance financial literacy, improve the global sovereign debt architecture, and support regulatory modernization. In substance and in spirit, these priorities reflect the Administration’s approach to international institutions by ensuring that American time and resources serve American interests. We are also bringing that same discipline to the IMF and World Bank, so they remain true to their core mandates and are better positioned to promote economic growth.”
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