Washington, Sept. 17 (BUS): The Biden administration is one step closer to developing a central bank digital currency, known as the digital dollar, saying it will help boost the United States’ role as a leader in the global financial system.
The White House said Friday that after President Joe Biden issued an executive order in March calling on a variety of agencies to consider ways to regulate digital assets, the agencies have come up with nine reports, covering the effects of cryptocurrency on financial markets, the environment, innovation and other elements of the economic system. , reported the Associated Press (AP).
Treasury Secretary Janet Yellen said one of the Treasury’s recommendations is that “policy and advance US technical work on a potential central bank digital currency, or CBDC, so that the United States is prepared if central bank digital currencies are determined to be in the national interest.”
“At the moment, some aspects of our current payment system are too slow or too expensive,” Yellen said in a call Thursday with reporters presenting some of the reporting findings.
Central bank digital currencies are different from existing digital money available to the general public, such as the balance in a bank account, because it will be the direct responsibility of the Federal Reserve, not a commercial bank.
According to a nonpartisan think tank at the Atlantic Council, 105 countries representing more than 95% of global GDP are already exploring or creating a central bank digital currency.
The Board found that the United States and the United Kingdom were far behind in creating a digital dollar or its equivalent.
Treasury, the Department of Justice, the Consumer Finance Protection Bureau, the Securities and Exchange Commission, and other agencies are tasked with contributing reports that address various concerns about the risks, development, and use of digital assets. Several reports will be released in the coming weeks and months.
Eswar Prasad, a professor of commerce at Cornell University who studies currency digitization, said the Treasury report “takes a positive view on how the digital dollar can play a beneficial role in increasing payment options for individuals and businesses” while acknowledging the risks of its development.
He said the report paves the way for the creation of agency regulations and legislation “that can improve the trade-offs between benefits and risks associated with cryptocurrencies and related technologies.”
The Blockchain Association, which has been lobbying lawmakers on Capitol Hill, said in a statement that the White House reporting was a “missed opportunity to advance US leadership in the crypto space.”
“These reports focus on risks — not opportunities,” the statement read, “and omit substantive recommendations on how the United States can foster a burgeoning crypto industry, including job creation, improved financial system, and expanded access for all Americans.”
On Capitol Hill, lawmakers introduced various pieces of legislation to regulate cryptocurrencies and other digital assets.
Sheila Warren, CEO of the Crypto Council Innovation Council, said in an emailed statement that the report “appears to be kicking the can down the road,” she said, “we don’t see clear recommendations.”
National Economic Council Director Brian Deese told reporters, “In recent months we have seen significant turmoil in the cryptocurrency markets and these events really highlight how cryptocurrencies, without proper oversight, risk harming the financial stability of Americans and our national security.”
“This is why this administration believes that now more than ever, judicious regulation of cryptocurrency is needed,” he said.
On Friday, he said that the administration plans to “implement a comprehensive action plan with priority steps to mitigate the major risks of cryptocurrencies — among others, money laundering and terrorist financing.”
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