According to White House sources, President Joe Biden will issue an executive order on Wednesday instructing government departments to begin work on developing a digital US dollar.
According to a statement, the US effort will explore the merits and potential hazards of private cryptocurrencies such as bitcoin, while “putting urgency on research and development of a prospective United States CBDC.”
More than 100 countries, including China’s digital yuan, are researching or have initiated pilot programs with their own central bank digital currency (CBDC), including the world’s largest economy.
Officials scoffed at the suggestion that the United States is a latecomer to the endeavor.
“The implications of potentially issuing a digital dollar are profound,” one official told reporters, stressing the crucial role of the American currency in the global economy.
“We’ve got to be very, very deliberate about that analysis because the implications of our moving in this direction are profound for the country that issues the world’s primary reserve currency.”
Biden’s executive order will direct federal agencies, including the Treasury Department, to look into consumer protection, financial inclusion, and the exploitation of digital assets for illegal purposes.
The US “can move swiftly, but we can also move in a wise and inclusive way,” according to the official.
The officials dismissed Beijing’s competitiveness, claiming that the US dollar “has been and will continue to be critical to the stability of the international monetary system as a whole,” and that foreign central bank currencies “do not threaten this dominance.”
The rise of cryptocurrencies and the increased usage of digital payments has sparked interest in an official digital currency, and major central banks around the world are looking into it: Nigeria introduced its own virtual currency in October, and El Salvador has made bitcoin legal tender.
– ‘Explosive growth –
Digital assets, such as cryptocurrencies, have experienced explosive growth in recent years, achieving a market valuation of $3 trillion last November, up from $14 billion just five years ago.
Around 16 percent of adult Americans, or 40 million people, have invested in, traded, or utilized cryptocurrencies, according to the White House.
However, “Without oversight the explosive growth in cryptocurrency use would pose risks to Americans, to the stability of our businesses, our financial system and our national security,” the official said.
Another official emphasized the importance of ensuring that all Americans benefit from advancements, stating that “previous types of financial innovation have harmed American families while enriching a small group of people.”
In January, the US Federal Reserve published a paper stating that digital currencies may bring potential benefits to American consumers and businesses, but that it is unclear if these benefits would exceed the risks.
According to Biden’s directive, US federal agencies would investigate money laundering as well as efforts to dodge financial sanctions through the use of digital currencies.
Despite concerns, the official stated that they have not been a “viable workaround” for Moscow to avoid the “financial sanctions we’ve placed across the whole Russian economy” as a result of the invasion of Ukraine.
SOURCE: THE GUARDIAN