In comparison to the other big economies, the United States has been very slow in testing its central bank digital currency (DBDC) aka Digital Dollar. However, this doesn’t mean that they are turning a blind eye to it.
The US Treasury Department will now lead a working group that will conduct regular talks on the future launch of a Digital Dollar. On Wednesday, March 1, Nellie Liang, Treasury undersecretary for domestic finance said that the working group would include leaders from the Treasury, Federal Reserve, National Security Council, and other agencies.
In the coming months, the goal of the group is to actively discuss the developments over the “possible CBDC and other payment innovations”. One of the key discussion goals will be whether a US CBDC will help maintain its dominance in global financial leadership. Besides, the working group will also consider other factors like protecting privacy, preserving national security, and preventing any illicit financial transactions.
However, Liang clarified that these announcements are in no way a signal that the Biden administration is fully willing to adopt CBDCs in the future. She also reiterated that the Treasury and the Fed are still not sure whether a CBDC is needed. Lian said:
“The Fed is conducting technology research and experimentation to inform design choices so that it is positioned to issue a CBDC if it were determined to be in the national interest”.
Concerns Surrounding Digital Dollar
Some policymakers in the US have expressed concerns that a widely accessible CBDC could put the stability of the traditional banking system in jeopardy. “There are also risks to retail CBDCs, including the potential for runs into a retail CBDC that could destabilize private-sector lending during stress periods,” said Liang.
The Treasury undersecretary also believes that an improved interbank payments system could eliminate the appeal of the Digital Dollar. Moreover, the Fed is also working to introduce a widely available real-time payments systems for US banks.
Liang also added that the US working group will engage with governments worldwide on this issue. She noted:
“We have an interest in ensuring that CBDCs interact safely and efficiently with the existing financial infrastructure, that they support financial stability and the integrity of the international financial system”. Global payments should “continue to reflect broadly-shared democratic values like openness, privacy, accessibility and accountability to the communities that rely upon them.”
The post US Treasury Will Lead A Working Group That Looks Into Digital Dollar appeared first on CoinGape.
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