Treasury Secretary Janet Yellen speaks after touring the IRS New Carrolton Federal Building in Lanham, Maryland. The Biden administration is one step closer to developing a central bank digital currency known as the digital dollar. / ALEX BRANDON / ASSOCIATED PRESS FILE PHOTO
WASHINGTON (AP) — The Biden administration moves one step closer to developing a central bank digital currency known as the digital dollar, saying it would help bolster the US’s 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 several agencies to look at ways to regulate digital assets, the agencies released nine reports examining the impact of cryptocurrency on financial markets, the environment , innovation and other elements of the economic system.
Treasury Secretary Janet Yellen said a Treasury recommendation is that the US “continue policy and technical work on a potential central bank digital currency, or CBDC, so that the United States is prepared if it is determined that CBDC is in the pipeline.” national interest.”
“Right now, some aspects of our current payment system are too slow or too expensive,” Yellen said during a meeting on Thursday with reporters detailing some of the reports’ findings.
Central bank digital currencies differ from existing digital money available to the general public, such as the balance in a bank account, in that they would be a direct liability of the Federal Reserve, not a commercial bank.
According to the Atlantic Council’s impartial think tank, 105 countries representing more than 95% of global gross domestic product are already exploring whether they have created a central bank digital currency.
The council found that the US and UK are lagging 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 were required to contribute 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 trade professor at Cornell who studies the digitization of currencies, said the Treasury report “takes a positive stance on how a digital dollar can play a useful role in increasing payment options for individuals and businesses,” while reducing risks. of its development are recognized.
He said the report paves the way for the creation of regulations and legislation from agencies “that can improve the trade-off between benefits and risks associated with cryptocurrencies and related technologies.”
The Blockchain Association, which lobbies lawmakers on Capitol Hill, said in a statement that the White House reports are “a missed opportunity to bolster US crypto leadership.”
“These reports focus on risks – not opportunities,” the statement reads, “and omit substantive recommendations on how the United States can promote its burgeoning crypto industry, including job creation, improvements to the financial system, and expanded access.” for all Americans.”
On Capitol Hill, lawmakers have filed several laws to regulate cryptocurrency and other digital assets.
Sheila Warren, CEO of the Crypto Council for Innovation, said in an emailed statement that the report “seems to be kicking the eye on the road,” she said, “we don’t see any clear recommendations.”
National Economic Council director Brian Deese told reporters that “we have seen significant turmoil in the cryptocurrency markets in recent months and these events really show how, without proper oversight, cryptocurrencies are at risk to the financial stability of ordinary Americans.” and harm our national security. .”
“That’s why this government believes that now more than ever,” he said, “careful regulation of cryptocurrencies is needed.”
He said on Friday that the government plans to “implement a comprehensive action plan that includes priority steps to mitigate key cryptocurrencies’ risks — including money laundering and terrorist financing.”
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This post Treasury recommends exploring the creation of a digital dollar
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