- The president of the United States has ordered the acceleration and priority of studies and tests for the development of a CBDC.
- Likewise, an in-depth analysis of the risks cryptocurrencies pose to the U.S. financial system has been tasked.
- The digital dollar will enter the world of cryptocurrencies to compete with the digital yuan, launched by China, and other private virtual currencies.
President of the United States Joe Biden is looking to end the speculation circulating around cryptocurrency markets made clear the country’s intention to launch the digital dollar, an issue to which his administration had seemed slow to.
Biden has previously stated that none of the digital currency projects implemented by other countries pose a threat to the dollar as the leading currency in global commercial transactions. China’s digital yuan has been advancing rapidly since 2014 and is already in the late phases of development leading to its full implementation across the country.
Biden’s announcement is in line with plans laid by the International Monetary Fund’s to support the issuance of central bank digital currencies around the world. The body has said that CBDCs are better than cryptocurrencies. Currently, some 100 countries are said to be working at different speeds on their own CBDC projects.
Top Priority on the Digital Dollar
Biden's executive order directs his administration to give "the highest priority to the development and investigation of a potential central bank digital currency" for the United States, the White House statement said.
The government argues that “16 percent of adult Americans – approximately 40 million people – have invested in, traded, or used cryptocurrencies,” according to studies done so far.
It expressed that "the rise of digital assets creates an opportunity to strengthen US leadership in the global financial system and on the technological frontier, but also has substantial implications for consumer protection, financial stability, national security, and climate risk."
With this move, the U.S. is attempting to "maintain technological leadership in this rapidly growing space." The government is aware of the competition that will only rise in the coming years to challenge for dominance in world trade through digital currencies. China, Russia, India and other countries are working hard in this field to that end.
On the Flipside
- The United States has been working towards the digital dollar project through the Federal Reserve for a long time, But there had been no coordinated effort to implement it until now.
Along with the launch of the digital dollar, the government wants to evaluate the extent of the risks posed by the implementation of a CBDC, and the approval of the use of cryptocurrencies to the U.S. economy and its financial systems.
Why You Should Care
- The United States considers cryptocurrencies and the entire blockchain industry to be a matter of national security.
- In addition, the U.S. government wants the country to hold a prominent position in the crypto world.
Right now, the pressure being put on the Biden administration by the war in Ukraine and rising interest in crypto around the world is mounting and could have perhaps contributed to the acceleration of plans to develop the digital dollar.