US to review digital currency

10 Mar 22

US president Joe Biden has given the green light for the nation to assess the benefits and risk of adopting a central bank digital currency.


Joe Biden Shutterstock 1849262836

US president Joe Biden. Image © Stratos Brilakis/Shutterstock

In an executive order published yesterday, Biden urged departments to explore the currency to help with the “responsible development of digital assets”.

Reviews will scrutinise if a central bank digital currency (CBDC) will have any benefits to consumers and businesses, alongside any potential risks to existing payment system and national security.

Biden said: “My administration places the highest urgency on research and development efforts into the potential design and deployment options of a United States CBDC.”  

Although some digital assets are within the scope of existing domestic laws and regulations, the US said it must take strong steps reduce the risks these pose to consumers and investors.

The overall review will be coordinated through an inter-agency approach through the president for national security affairs and the president for economic policy.

Under the executive order, the US Treasury will partner with interagency colleagues to produce a report on the future of money and payment systems. 

The Treasury report will also review whether a CBDC will help to boost the level of financial inclusion in the US, the order said.

Janet Yellen, secretary of the US Treasury, said: “President Biden’s historic executive order calls for a coordinated and comprehensive approach to digital asset policy.

“This approach will support responsible innovation that could result in substantial benefits for the nation, consumers, and businesses. 

“It will also address risks related to illicit finance, protecting consumers and investors, and preventing threats to the financial system and broader economy.”

In recent years, the market value of digital assets has soared, valued at $3trn in November 2021, compared to $14bn reported in November 2016, the US government said.

In September, El Salvador became the first sovereign state to use Bitcoin as a legal tender alongside its main currency the US dollar, to help increase the safety of payments.

The Central American country has come under increasing pressures from lenders including the International Monetary Fund to ditch the currency, amid potential financial risks.

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