The Joe Biden administration is finally moving forward on its project to launch a central bank digital currency (CBDC), in this case, a digital dollar. For the government, a digital version of the dollar will help reinforce the US’s role as a leader in the global financial system.
At the end of this week, the government issued a series of reports and among them is one that deals with the digital dollar. According to the document, an interagency working group will meet on a regular basis to support the Federal Reserve’s (Fed) ongoing research into a US CBDC.
In addition, the group will have to prepare the rest of the federal government if or when the Fed decides to create the digital version of the dollar.
Treasury recommends launching a digital dollar
As the Associated Press reported, Treasury Secretary Janet Yellen said the cabinet recommends the US launch the CDBC. According to her, one should move forward with “the policy and technical work on a potential central bank digital currency, or CBDC.” The idea, according to Yellen, is for the US to be prepared if the CBDC is in the national interest.
“Right now, some aspects of our current payment system are too slow or too expensive,” Yellen told reporters Thursday, presenting some of the findings from the reports.
A senior administration official, who was not named, explained that the US wanted to be in a position to issue a CBDC if the Fed decides it is in the country’s interest to create one. In the case of the US, the CBDC would be a direct liability of the Federal Reserve, not a commercial bank.
The Treasury, the country’s Department of Justice; the Consumer Financial Protection Department; the SEC and other agencies were tasked with contributing to reports that addressed risks, the development and use of digital assets in the country.
US delayed in plans to launch CBDC
On the CBDC in particular, the US council found that the country is far behind in creating a digital dollar. This is because it is estimated that around 90% of the countries in the world are already studying the launch of a CBDC. China, for example, is already well advanced in this regard, testing its digital currency for months.
The Bahamas, meanwhile, has already launched its digital currency, the Sand Dollar, in 2020. Brazil is also moving forward with the digital real and promises to launch it in 2024.
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