The United States is one step closer to a digital dollar. Joe Biden signed an executive order this week asking the Treasury, but also the Commerce Department and several federal agencies, to submit to him within six months a report on the “future of the currency”. This report should detail the consequences, advantages and disadvantages of the creation of a central bank digital currency.
The decree highlights several objectives: the protection of American interests, the protection of global financial stability, the prevention of illicit uses, the promotion of “responsible innovation”, financial inclusion and the leadership of the United States.
The Chinese threat
The Fed is also asked to continue its research on the feasibility of a digital dollar and the steps to be put in place before the creation of such a currency. “We have to be very, very careful about this analysis, because the implications of this development would be profound for a country that issues the world’s leading reserve currency,” said a House official during a press conference. -White.
Caution is the watchword of the Biden administration on the subject, while other nations have more advanced projects in this area. Nine countries have already launched their central bank virtual currency project, and 16 others including China have started developing assets. It is moreover the fear inspired by Beijing’s progress in this area that is pushing some people in the United States to demand more audacity.
Determine the risks
However, Washington declares itself convinced that these various projects do not call into question the power of the dollar. “The role of the dollar has been and will continue to be crucial to the stability of the international monetary system as a whole. Foreign central bank digital currencies do not threaten that dominance,” the White House said, adding that if the United States goes down this path, it will be a “long process.”
In addition to the Treasury and the Fed, several federal agencies will also be mobilized. This is particularly the case for the Securities and Exchange Commission (SEC) and the Consumer Financial Protection Bureau, which will have to determine the systemic risks of cryptocurrencies, or their consequences for investors and consumers. Cryptocurrency advocates point in particular to the benefits it could have for the inclusion of marginalized populations, in a country where 5% of people do not have a bank account, due to high fees. 40 million Americans, or 16% of the population, have already invested in cryptocurrencies.