The US Treasury Recommends Exploring Creation of a 'Digital Dollar'

Some news Friday from the Associated Press. "The Biden administration is moving one step closer to developing a central bank digital currency, known as the digital dollar, saying it would help reinforce the U.S. role as a leader in the world financial system."The White House said on Friday that after President Joe Biden issued an executive order in March calling on a variety of agencies to look at ways to regulate digital assets, the agencies came up with nine reports, covering cryptocurrency impacts on financial markets, the environment, innovation and other elements of the economic system. Treasury Secretary Janet Yellen said one Treasury recommendation is that the U.S. "advance policy and technical work on a potential central bank digital currency, or CBDC, so that the United States is prepared if CBDC is determined to be in the national interest.... Right now, some aspects of our current payment system are too slow or too expensive," Yellen said on a Thursday call with reporters laying out some of the findings of the reports.... According to the Atlantic Council nonpartisan think tank, 105 countries representing more than 95% of global gross domestic product already are exploring or have created a central bank digital currency. The council found that the U.S. and the U.K. are far behind in creating a digital dollar or its equivalent.... Several [U.S. agency] reports will come out in the next weeks and months. Eswar Prasad, a trade professor at Cornell who studies the digitization of currencies, said Treasury's report "takes a positive view about how a digital dollar might play a useful role in increasing payment options for individuals and businesses" while acknowledging the risks of its development. He said the report sets the stage for the creation of agency regulations and legislation "that can improve the benefit-risk tradeoff associated with cryptocurrencies and related technologies." A statement from the U.S. White House cautions that the report does not make any decisions "regarding particular design choices for a potential U.S. CBDC system." Instead, the 58-page document analyzes 18 different choices for technical designs, and according to its introductory paragraph, "makes recommendations on how to prepare the U.S. Government for a U.S. CBDC system." But "it does no make an assessment or recommendation about whether a U.S. CBDC system should be pursued."

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