Despite the federal government’s need to prepare for the prospective introduction of a digital U.S. dollar, the senior official for financial markets and stability at the Treasury Department did not convey a sense of urgency.
The Federal Reserve plans to deploy real-time interbank payments in 2023. Still, regulators need to consider if a central bank digital currency, or CBDC, will speed up or reduce the cost of these transactions. Nellie Liang, undersecretary for domestic finance at the Treasury, stated this.
She was even more direct when asked if a digital dollar would support the dollar’s dominance as a reserve currency or in international trade.
In an interview conducted Monday in the Washington bureau of Bloomberg News, she stated, “In my opinion, our technology is not the source of our worldwide supremacy.” It is a result of our governance structure, the laws governing our financial markets, the rule of law, and the stability of our institutions.
None At This Time
She said that the U.S. might be persuaded to adopt a CBDC if several nations do so after five or more years. But she highlighted that the primary reason the U.S. government was researching a future CBDC was to be ready for a need that didn’t yet exist.
She said that in a report released in September, the Treasury “laid out a very planned, forward path for evaluating CBDC so that the Fed would be in a position to issue one if it decided it wanted to.”
Without committing to do so, the Fed released a white paper on central bank digital currency in January. It stated that such a move would need to be undertaken in collaboration with the executive branch and Congress.
The white paper stated: “The Federal Reserve does not aim to continue with issuing a CBDC without unambiguous backing from the executive branch and from Congress, ideally in the form of a special authorising statute.”
Different people view the Board of Governors of the Federal Reserve differently. Governor Christopher Waller has come out as a central bank digital currency skeptic, while Vice Chair Lael Brainard has framed the debate in the context of a more effective payment system that might help the underbanked and the overall goal of global economic strategy.
Is Digital Dollar Good For World?
An opportunity to reestablish American and its allies’ norms and principles are presented by establishing a U.S. CBDC.
The preservation of financial stability, upholding the rule of law, and protecting privacy are examples of policy issues that may be included to varying degrees in the design of a digital currency platform and in how it is used and governed.
A central bank digital currency provides stability in a world where cryptocurrencies and stablecoins are rising by lowering the danger of market manipulation, counterparty risk, and fraud and providing the same consumer protections as the U.S. dollar.
A U.S. CBDC would be distinguished from the corruption, fraud, and despotic rulings in other areas of the globe by the clarity in the rule of law and regulatory framework that would go along with it.