President Joe Biden issued an executive order that could lead to the creation of a digital currency.
The executive order said that the administration places the highest priority on research and development efforts into the potential design and deployment options of a United StatesCBDC.
Biden's order said a US-issued digital currency could be used to support efficient and low-cost transactions, particularly for cross-border funds transfers and payments, and to foster greater access to the financial system. Biden ordered federal agencies to prepare a report within six months analyzing the implications of the potential risks and downsides. The White House said that over 100 countries are already exploring or piloting CBDCs.
The rise in digital assets creates an opportunity to reinforce American leadership in the global financial system and at the technological frontier, but also has substantial implications for consumer protection, financial stability, national security, and climate. Biden's order encourages regulators to ensure sufficient oversight and safeguard against any systemic financial risks posed by digital assets.
There would be no need for mining with a digital currency issued by a central bank.
CNBC wrote that Biden's order appeared to take a supportive stance toward the industry, as the price of Bitcoin was up 8 percent today. A Biden administration official noted in a call with reporters yesterday that the price of the digital currency peaked at $68,000 and then fell back down to $39,000.
AdvertisementThe Federal Reserve defines a Central Bank Digital Currency as a digital liability of a central bank that is widely available to the general public.
While Americans have long held money predominantly in digital form, for example in bank accounts, payment apps or through online transactions, aCBDC would be a liability of the Federal Reserve. Because it would be a liability of the Federal Reserve, aCBDC would be the safest digital asset available to the general public.
Stable coins that are pegged to the value of the dollar would be similar to a US-issued digital currency. The Federal Reserve would issue theCBDCs.
The Federal Reserve says it hasn't decided whether to pursue a digital currency, but that it could provide households and businesses a convenient, electronic form of central bank money, with the safety and liquidity that would entail.
The Federal Reserve does not intend to proceed with issuance of aCBDC without clear support from the executive branch and from Congress, ideally in the form of a specific authorizing law.
The Federal Reserve is committed to ensuring the continued safety and availability of cash and is considering a CBDC as a means to expand safe payment options, not to reduce or replace them.
Senior Biden administration officials told reporters that the implications of issuing a digital dollar are profound.
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