US Treasury recommends exploring creation of a digital dollar

WASHINGTON: The Biden administration is moving one step closer to developing a central bank digital currency, known as the digital dollar, saying it would help reinforce the US role as a leader in the world financial system. Treasury Secretary Janet Yellen said one Treasury recommendation is that the U.S. “advance policy and technical work on a potential central bank digital currency, or CBDC, so that the United States is prepared if CBDC is determined to be in the national interest.” “Right now, some aspects of our current payment system are too slow or too expensive,” Yellen said on a Thursday call with reporters laying out some of the findings of the reports. Eswar Prasad, a trade professor at Cornell who studies the digitization of currencies, said Treasury’s report “takes a positive view about how a digital dollar might play a useful role in increasing payment options for individuals and businesses” while acknowledging the risks of its development. He said the report sets the stage for the creation of agency regulations and legislation “that can improve the benefit-risk tradeoff 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 cement U.S. 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 submitted various pieces of legislation to regulate cryptocurrency and other digital assets. Sheila Warren, CEO of the Crypto Council for Innovation, said in an emailed statement that the report “seem to kick the can down the road” she said, “we don’t see clear recommendations.” The director of the National Economic Council, Brian Deese, told reporters that “we’ve seen in recent months substantial turmoil in cryptocurrency markets and these events really highlight how, without proper oversight, cryptocurrencies risk harming everyday Americans’ financial stability and our national security.” “It is why this administration believes that now more than ever,” he said, “prudent regulation of cryptocurrencies is needed.” He said on Friday that the Administration plans to “execute a comprehensive action plan with priority steps to mitigate key risks of cryptocurrencies — among others, money laundering and financing for terrorism.”