A digital dollar? – The race for central bank digital currencies (CBDC) is in full swing. While China has just announced spectacular results for its DC / EP system, the United States is still at the thinking stage.
The e-dollar will not be for now
With the support of the Federal Reserve (Fed), the US Treasury is closely studying the possibility of the United States having a digital dollar.
During an online conference hosted by the Atlantic Council on Transatlantic Economic Relations, Justin Muzinich, Assistant Secretary to the U.S. Treasury, provided an update on the progress of a possible dollar-denominated CBDC :
“It’s something that we are studying (…). It is really a decision which is as much for the Fed as for the Treasury (…). There are clearly efficiency benefits and cost benefits to using a distributed ledger, (…). And I also think, more broadly, it’s important for the government to embrace innovation and not be scared by it.”
The Assistant Secretary of the Treasury explains that the Boston branch of the Fed has teamed up with the Massachusetts Institute of Technology (MIT) to carry out initial technical research to develop a digital currency.
The US is hesitating between the advantages and disadvantages of a CBDC
In addition to the qualities of blockchain technology mentioned above, issuing their own “cryptocurrency” would allow the United States not to be overtaken by other cryptocurrencies. This applies equally well whether they are decentralized, run by another country (China), or by the private sector (Facebook’s Libra stablecoin).
“Cryptocurrencies can be more than just a means of payment. They can lead to the transfer of some functions usually performed by governments to the private sector.”
But Justin Muzinich was concerned about the risks that a digital currency could facilitate illicit activities, in particular to evade anti- money laundering rules. In this context, the Deputy to the Treasury asks himself, for example:
“(…) How much of an individual’s day-to-day transactions should the government see, in such a digital world? There are a whole host of factors we need to think about. “
However, to be honest till the end, the actual system failed terribly to prevent money laundering and the FInCEN files prove that!
But it succeeded to exclude millions, if not billions, of people from the financial system and giving corrupting power to regulators and banks.
There is a huge gap between China and the United States on the subject of central bank digital currencies. The European Union also seems much more advanced, at least in its will, to rapidly issue a digital euro. Even if the Americans always have a good strike force in reserve, they are clearly lagging behind their competitors.