The Biden administration is one step closer to developing a central bank digital currency known as the digital dollar, saying it would help bolster the U.S.’s role as a leader in the world financial system.
The White House said Friday that after President Joe Biden issued an executive order in March calling for a variety of agencies to explore ways to regulate digital assets, agencies had released nine reports examining the impact of cryptocurrencies on financial markets, the environment, innovation and other elements of the economic system.
Treasury Secretary Janet Yellen said one recommendation from the Treasury Department is that the US “prompts policy and technical work on a potential central bank digital currency, or CBDC, so that the United States is prepared when CBDC is determined to be in the national interest.”
“Right now, some aspects of our current payments system are too slow or too expensive,” Yellen said in a call to reporters Thursday, which outlined some of the reports’ findings.
Central bank digital currencies differ from existing digital money available to the general public, such as B. the balance in a bank account, since they would be a direct liability of the Federal Reserve and not a commercial bank.
According to the non-partisan think tank Atlantic Council, 105 countries, which account for more than 95% of global gross domestic product, are already considering or have created a central bank digital currency.
The council noted that the US and UK are far behind in creating a digital dollar or its equivalent.
The Treasury Department, the Justice Department, the Consumer Finance Protection Bureau, the Securities and Exchange Commission, and other agencies were tasked with contributing to reports that would address various concerns about the risks, development, and use of digital assets. Several reports will appear in the coming weeks and months.
Eswar Prasad, a Cornell University trade professor who studies the digitization of currencies, said the Treasury Department’s report “exposes a positive view of how a digital dollar could play a useful role in increasing payment capabilities for individuals and businesses.” while acknowledging the risks of its development.
He said the report sets the stage for the creation of government regulations and laws “that can improve the balance of benefits and risks associated with cryptocurrencies and related technologies.”
The Blockchain Association, which campaigns for lawmakers on Capitol Hill, said in a statement that the White House reports are “a missed opportunity to solidify U.S. crypto leadership.”
“These reports focus on risks – not opportunities,” the statement said, “and omit key recommendations for how the United States can nurture its burgeoning crypto industry, including job creation, financial system improvements, and expanded access for all.” American.”
On Capitol Hill, lawmakers have presented various bills regulating cryptocurrency and other digital assets.
Sheila Warren, CEO of the Crypto Council for Innovation, said in an emailed statement that the report “seems to get the can off the ground,” she said, “we don’t see any clear recommendations.”
Director of the National Economic Council Brian Deese told reporters, “We have seen significant turmoil in the cryptocurrency markets over the past few months, and these events truly demonstrate how cryptocurrencies without proper oversight risk Americans’ financial stability and our national security to endanger .”
“Therefore, this government believes that prudent regulation of cryptocurrencies is needed now more than ever,” he said.
He said on Friday that the government plans to implement “a comprehensive plan of action with priority steps to mitigate the key risks of cryptocurrencies, including money laundering and terrorist financing.”
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