The U.S. Treasury Department has said that it will recommend that the federal government continue developing a central bank digital currency (CBDC) if it is in the national interest to do so.
Potential for a U.S CBDC
President Joe Biden signed his executive order in March of this year and Part of the order was for the appropriate agencies and departments to investigate the potential for the use of a U.S. CBDC.
Up till now, there has been no firm commitment from the Biden administration towards the development and launch of a digital dollar that would be controlled by the Federal Reserve.
Dubbed ‘Fedcoin’ by some in the media, a digital dollar in the shape of a CBDC would purportedly give the central bank (Federal Reserve) far more control over the economy, even down to the micro level, and allow it to have huge influence over how citizens transact.
CBDCs a long way off
Janet Yellen, the U.S. Treasury Secretary, has said that a U.S. CBDC is still a long way off, and had previously stated that the U.S. government was not focussing on a CBDC as of now.
In tandem with this view, Michael Barr, United States Federal Reserve Vice Chairman for Supervision, has said that while he believes “[a] CBDC could be a valuable tool”, he believes that the issuance of a digital dollar “isn’t needed at the moment”.
In the national interest?
However, contrary to these opinions, an article published by Coindesk on Thursday stated that the Treasury Department will in fact urge the federal government to press ahead with work towards the issuance of a digital dollar, but only if it is in the national interest.
The article also highlights the rather uncertain nature of what actually is in the national interest as regards a CBDC, and who exactly should decide this. There was a question of whether a law should be formulated by legislators in order to give the Federal Reserve the authorisation to create a CBDC.
International progress
It can be imagined that there could be a lot of pressure on the Treasury Department to vastly increase the speed towards a roll-out of a digital dollar, given that 105 countries across the world are either piloting their own CBDC or are embarked on its development.
China appears to be a front-runner in the field given that Its Digital Currency Electronic Payment (DC/EP) programme is already being piloted in a number of Chinese cities.
It seems that the U.S. is the only major economic power to not be steadfastly developing its own CBDC, with the exception of the UK, which published a disparaging report on CBDCs, stating that they posed “significant risks” to the UK economy.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
