Treasury recommends looking into the creation of a digital dollar
Washington, D.C. The Biden administration is taking a step closer to creating the “digital dollar,” a central bank digital currency, and claims it will strengthen America’s position as a global financial system leader.
The White House announced on Friday that nine reports covering cryptocurrency’s effects on financial markets, the environment, innovation, and other aspects of the economic system were produced after President Joe Biden issued an executive order in March directing various agencies to consider ways to regulate digital assets.
The U.S. should “advance policy and technical work on a prospective central bank digital currency, or CBDC,” according to a Treasury recommendation, according to Treasury Secretary Janet Yellen, to be ready if it is judged that CBDC is in the national interest.
On a call with reporters on Thursday, Federal Reserve Chair Janet Yellen summarised some of the report’s findings, saying that “right now, some components of our current payment system are either slow or too expensive.”
Digital currencies issued by central banks would be a direct obligation of the Federal Reserve rather than a commercial bank, setting them apart from publicly accessible digital money like the balance in a bank account.
105 nations comprising more than 95% of the global GDP are already studying or have implemented a central bank digital currency, according to the independent think group Atlantic Council.
The council discovered that the United States and the United Kingdom are far behind in developing a digital dollar or something similar.
To contribute to reports that would address various worries about the risks, development, and use of digital assets, the Treasury, the Justice Department, the Consumer Finance Protection Bureau, the Securities and Exchange Commission, and other agencies were tasked. Over the coming weeks and months, several reports will be released.
The Treasury report “takes a positive view about how a digital dollar might play a useful role in increasing payment options for individuals and businesses,” according to Eswar Prasad, a trade professor at Cornell who specializes in the digitization of currencies while acknowledging the risks of its development.
The report, according to him, “can improve the benefit-risk tradeoff associated with cryptocurrencies and similar technology,” he said, setting the way for the development of agency policies and legislation.
The White House reports, according to the Blockchain Association, which works to influence politicians on Capitol Hill, are “a squandered opportunity to entrench U.S. crypto leadership.”
The statement claims that “these analyses focus on hazards — not opportunities” and “omit significant recommendations on how the United States might promote its developing cryptocurrency business, including job development, improvements to the banking system, and broader access for all Americans.”
Legislators have proposed several bills on Capitol Hill to control cryptocurrencies and other digital assets.
The report “seems to push the can down the road,” according to Sheila Warren, CEO of the Crypto Council for Innovation, who added, “we don’t see specific recommendations.”
He explained that “that is why this administration believes that sensible regulation of cryptocurrencies is needed today more than ever.”
According to him, the administration intends to “implement a comprehensive action plan with priority steps to mitigate significant dangers of cryptocurrencies, including money laundering and financing for terrorism,” on Friday.
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