Biden instructs government to study digital dollar, other cryptocurrency risks

FILE PHOTO: Representations of Virtual Cryptocurrencies Placed on US Dollar Banknotes in this Image Taken on November 28, 2021. REUTERS / Dado Ruvic / Illustration

March 9, 2022

By Andrea Shalal and Katanga Johnson

WASHINGTON (Reuters) – US President Joe Biden will sign an executive order on Wednesday urging the government to assess the risks and rewards of creating a central bank digital dollar and other cryptocurrency issues, officials said. government.

Biden’s mandate will require the Treasury Department, the Commerce Department and other key agencies to prepare reports on the “future of money” and the role that cryptocurrencies will play.

Extensive surveillance of the cryptocurrency market, which topped $ 3 trillion in November, is essential to ensure US national security, financial stability and competitiveness, and to prevent the growing threat of cybercrime, officials said.

Analysts see the long-awaited executive order, first cited Monday, as a clear recognition of the growing importance of cryptocurrencies and their potential implications for the United States and global financial systems.

One of its key steps is guiding the US government to assess the technological infrastructure required for a possible US Central Bank (CBDC) digital currency – an electronic version of dollar bills in your pocket.

In January, the US Federal Reserve raised the question of whether the United States should pursue a digital dollar in Congress, prompting analysts to predict that such a project would take years.

However, one official said the United States would continue to develop a digital dollar, albeit cautiously given the role of the dollar as the world’s main reserve currency.

“We have to be very, very careful about this analysis, because the consequences of our move in this direction are profound for the country that issues the world’s primary reserve currency,” the official said.

The provision also encourages the Federal Reserve to continue its research and development efforts.

Nine countries have launched digital central bank currencies and 16 others – including China – have begun developing such digital assets, according to the Atlantic Council, leading some in Washington to the dollar could lose some of its dominance in China.

The US dollar remains based on key fundamentals, including the commitment to transparency, the rule of law and the full independence of the Federal Reserve, the official said.

“The role of the dollar has been and will continue to be crucial to the stability of the international monetary system as a whole. “The digital currencies of foreign central banks and their introduction alone do not threaten this dominance.”

The United States will monitor developments in order to maintain the central position of the dollar in the world economy, the official said.

In addition, the mandate calls on services, including the Hellenic Capital Market Commission and the Office of Consumer Financial Protection, to reconsider other issues raised by cryptocurrencies, including systemic risk and consumer protection.

A key goal is to restore the inefficiency of the current US payment system and boost economic integration, especially of poor Americans, about 5% of whom currently do not have bank accounts due to high commissions, an official said.

“To date, there has been no prior organized effort to bring together the know-how and principles of the entire US government to inform a holistic approach to digital data,” another official added.

(Report by Andrea Shalal and Katanga Johnson in Washington; Edited by Michelle Price & Simon Cameron-Moore)

Biden instructs government to study digital dollar, other cryptocurrency risks

Source link Biden instructs government to study digital dollar, other cryptocurrency risks

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