WASHINGTON (Washington Insider Magazine) – A digital currency in the United States might be on the way.
The Biden government is supporting the development and research of a “US Central Bank Digital Currency,” or CBDC.
According to NBC NEWS, the action is part of a broad executive order that President Joe Biden is due to sign on Wednesday, authorizing the federal government to investigate potential applications and restrictions for digital assets like cryptocurrency.
Although a digital currency in the United States would not necessarily affect everyday experiences such as buying products or services, economists believe it might impact commercial and central banking, and also government sanctions, banking accessibility, and taxation.
According to a fact sheet provided by the White House, the executive order would direct the administration to explore the technological requirements for a digital currency and push for the Federal Reserve to pursue its study and production.
In January, the Federal Reserve released a white paper on the possibility of establishing a CBDC to supplement existing banking systems. It determined that while a CBDC might make transactions easier and cheaper for consumers, it could also jeopardize the financial system’s stability in the United States.
The administration also stated in its fact sheet that it will take efforts to reduce the illicit financing and national security concerns presented by the criminal use of digital assets by focusing an unparalleled focus of concerted response across all key US government agencies.
The United States will not be the 1st country to use digital money. Many other nations have also rolled out and are now creating digital currencies, including China, which has established its own CBDC and has over 140 million consumers who have opened digital “wallets.” The Bahamas’ Sand Dollar is one of the most popular digital currencies in the world.
The decision by the Biden government, according to David Yermack, a professor and head of the financial department at New York University, alluded to what he considers is the inevitability of the larger march toward digital currencies.
While the government fact sheet did not go into detail on how a digital currency in the United States could perhaps work, Yermack speculated that the operation could be fairly straightforward, with money transfers flowing straight to and from the Fed, bypassing banking institutions and payment networks and allowing for near-seamless cash flows.
It’s a straightforward notion with far-reaching implications. According to Yermack, a widely used digital currency would raise existential problems for banks and other financial firms that facilitate payments.