The United States of America is considering the creation of the digital dollar through the Federal Reserve.
The president of the United States announced earlier this month that the government was studying the possibility of the country’s central bank, the Federal Reserve, issuing a new digital currency in the future. The debate about the implications of the supposed digital dollar, backed by the Fed, caused the main crypto assets in the market to register new rallies in their value. Even so, Biden stressed that he seeks to act cautiously, and after the decree, the president is waiting to receive a report from the US Treasury Department, which has six months to issue analysis on what the future of this currency would be like.
The Biden Administration seeks to know in depth the details about the consequences of this digital dollar initiative, as well as how it could affect the financial system. Specifically, what would be the payment systems, how would this affect economic growth, and what possibilities of access would citizens have. Also, no less important, is how the creation of the digital dollar would affect the security of the country. In addition to this report, the president asked the Fed to continue investigating this issue to assess what steps would be necessary for its eventual launch.
One of the reasons for this is that the United States does not want to fall behind other countries. Currently, as anticipated by the IMF (International Monetary Fund), nearly a hundred countries are exploring the feasibility of issuing their currencies in the form of digital currency, always with the support of their central banks.
If we take into account that there are at least more than 36 trillion dollars in dollar bills in circulation worldwide and hundreds of trillions in accounts, we can appreciate the scope of digital transactions today. For this reason, the existence of purely digital currencies becomes more relevant in 2022. Developments such as the Swedish eKrona or the Nigerian eNaira show us that the time is coming to materialize digital currencies. Although this will not mean the end of metallic money, far from it, we can expect that the use of these assets will introduce new security methods in the transactions that we carry out in the future from our devices.
Is the US Trying to catch up with an e-dollar, to Face China’s Actions?
China seems to have gotten ahead of the United States of America since the digital yuan has been in the experimental phase for almost two years. Some might think that the United States sees this as a possible threat, since currently the dollar holds hegemony when it comes to currencies, and digital currencies could revolutionize global finance.
Biden would be interested in putting a stop to private cryptocurrencies since they have multiplied in recent years, although they are extremely volatile and decentralized instruments. However, some analysts do not believe that this decision will have a negative impact on the digital currency market since a digital currency could increase the efficiency of central banks or the way the government collects taxes. By existing completely digitally, the synergy with online transactions carried out with this currency would be maximum and could improve the performance of the bank network.
According to the current scenario, the interest in developing digital currencies leads us to think if they will have a use case for the Blockchain and what it will mean for the cryptocurrency market, will we all be able to access the digital dollar in a few years, with the same ease as to the fiat dollar?
By Audy Castaneda
