An administration official told Insider that the US Treasury Department’s efforts to create an American digital currency could be imminent.
Treasury “is about technological development… so that we can move forward quickly when [it] is determined to be in the national interest,” said Treasury Undersecretary for Public Finance Nellie Liang at an event on Wednesday.
This is one of the strongest signals yet that a “digital dollar” or central bank digital currency (CBDC) could soon become a reality in the United States, pending approval by Congress, Insider reported.
What is a digital dollar?
The “Digital Dollar,” or CBD, is a government-backed digital currency. As the Federal Reserve says, it is readily available to the public, like cash.
Although it has been common for decades for money to exist in digital form, a CBDC would differ from existing publicly available digital money because the CBDC would be under the control of the Federal Reserve, not a commercial bank. It can run on cash, the Fed added.
The CBDC concept recently came into the spotlight as the Chinese government began publicly testing the digital currency in 2020. It was even outlined in the Pandemic Recovery Act of 2020. Scholars have argued that there are benefits for the United States, such as financial inclusion for underbanked people, and ways to implement it, such as even linking it to a central bank with the ability to hold bank accounts (which it has avoided since its inception).
The US Treasury Department has a task force tasked with working with the Federal Reserve and other groups to determine what a CBDC might look like, particularly with issues such as privacy, national security, and the role of the dollar in the global financial system. Liang’s prepared remarks were said.
According to PBS, the digital dollar is different from cryptocurrency because it cannot be mined by anyone.
One expert also told the publication that a CBDC could “go wild in either direction” when it comes to protecting privacy.
Lia Holland, director of communications and campaigns for the nonprofit digital activist group Fight for the Future, told PBS that unlike a private company, a government-backed digital currency is unlikely to sell user data to marketers.
On the other hand, he thought the ability to track digital transactions would be “incredibly attractive to legislators and legislators,” he added to the publication.
But nothing could happen without the support of Congress. Last year, Rep. Stephen Lynch (D-MA) introduced the “Electronic Currency and Secure Hardware (ECASH) Act” in the House to ask the Treasury to “support the development of the electronic dollar.” It remained in committee.
