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, in order 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 summarized 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, a number of reports will be released.
Legislators have proposed a number of bills on Capitol Hill to control cryptocurrencies and other digital assets.
“We’ve witnessed in recent months tremendous instability in cryptocurrency markets,” National Economic Council director Brian Deese told reporters. “These events truly underline how, without proper control, cryptocurrencies risk undermining regular Americans’ financial stability and our national security.”
He explained that “that is why this administration believes that sensible regulation of cryptocurrencies is needed today more than ever.”
