The US Treasury Department’s efforts to create a US digital currency may be imminent, a government official said, by insiders.
The Treasury “is concerned with the technological development … so that we can make rapid progress as [it] were determined to be in the national interest,” Nellie Liang, secretary of state for home finance at the Treasury, said at an event on Wednesday.
This is one of the strongest signs yet that a “digital dollar,” or central bank digital currency (CBDC), could soon be a reality in the US, pending Congressional approval, Insider reported.
Liang was speaking at an event hosted by the Atlantic Council’s GeoEconomics Center, a foreign policy think tank.
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What is a Digital Dollar?
While it has been common practice for decades to have money in a digital format, a CBDC “would differ from existing digital money available to the general public because a CBDC would be a liability of the Federal Reserve, not a commercial bank .” It could function together with cash, the Fed added.
The concept of a CBDC came into the limelight recently when the Chinese government started public testing a digital currency in 2020. In fact, it was short floated in a 2020 pandemic stimulus bill. Scholars have argued advantages to the US, such as financial inclusion for underbanked people, and ways it can be implemented, such as even to combine it with the Fed having the ability to hold bank accounts (something it has avoided from the start).
The U.S. Treasury Department has a working group to determine what a CBDC might look like, working with the Federal Reserve and other groups, particularly when looking at issues such as privacy, national security, and the role of the dollar in the global economy. financial system, said Liang’s prepared remarks. said.
A digital dollar is different from cryptocurrency, by PBSbecause it cannot be mined by just anyone.
An expert also told the outlet that a CBDC could go “drastically both ways” in terms of privacy protection.
Lia Holland, communications and campaign director for Fight for the Future, a nonprofit digital advocacy group, told PBS that a government-backed digital currency would most likely not sell user information to marketers, unlike a private company.
On the other hand, she thought the ability to monitor digital transactions would be “incredibly enticing to legislators and legislators,” she added.
But nothing could happen without the support of Congress. Last year, the “Electronic Currency and Secure Hardware (ECASH) Act” was introduced in the House by Rep. Stephen Lynch (D-MA) to ask the Treasury “support the development of an electronic dollar.” It languished in committee.