White House says US President will sign executive order calling for ‘digital dollar’
US President Joe Biden will order government agencies to create a digital American dollar on Wednesday, White House officials said.
According to a statement, amid the explosive growth of private cryptocurrencies such as bitcoin, the US effort will study the benefits and potential risks “while keeping urgency on research and development of potential United States CBDCs.”
The global rise of cryptocurrencies and the increasing use of digital payments have fueled interest in official digital currencies. Major central banks around the world are exploring the possibility: Nigeria launched its virtual money in October, while El Salvador has allowed bitcoin to operate as legal tender. According to Finance Minister Nirmala Sitharaman, India is set to launch a digital rupee this year.
The world’s largest economy will now join more than 100 countries that have explored or launched a pilot program with their own central bank digital currency (CBDC), including China’s digital yuan.
Officials dismissed the notion that Washington was late in the effort.
“The potential implications of issuing a digital dollar are profound,” an official told reporters, emphasizing the important role of the US currency in the global economy.
“We have to be very, very thoughtful about that analysis because the implications of our move in this direction are profound for the country that issues the world’s primary reserve currency.”
Mr. Biden’s executive order will call on agencies including the Treasury Department to investigate the use of digital assets for consumer protection, financial inclusion and illegal activities.
“The United States can move quickly, but we can move in a way that is smart, and that is inclusive,” the official said.
Officials downplayed competition from Beijing, saying the US dollar “has been and will continue to be vital to the stability of the international monetary system as a whole” and that those issued by foreign central banks “do not threaten this dominance.”
explosive growth
Digital assets, including cryptocurrency, have seen explosive growth in recent years, surpassing a $3 trillion market cap last November, up from just $14 billion just five years ago.
The White House said that about 16 percent of adult Americans – about 40 million people – have invested, traded or used cryptocurrencies.
However, “without monitoring, the explosive growth in the use of cryptocurrencies would pose a risk to Americans, the stability of our businesses, our financial system, and our national security,” the official said.
Another official stressed the need to ensure all Americans benefit from the advances because “earlier financial innovations have hurt American families while making a small group of people very wealthy.”
In January, the US Federal Reserve released a report stating that digital currencies could offer potential benefits to US consumers and businesses, but said it was unclear whether they would outweigh the potential risks.
Under Biden’s order, US government agencies will focus on efforts to use digital currencies to prevent money laundering and evade financial sanctions.
But the official said despite the concerns; They have not been a “viable solution” for Moscow to deal with the “financial sanctions we have imposed on the entire Russian economy” after the invasion of Ukraine.