US Treasury To Recommend Creation Of Digital Dollar If In National Interest

September 13, 2022 10:26 pm

Within the government, it will be the US Treasury Department’s role to advise the federal government on the creation of a digital dollar.

However, the point is made clear that this will only happen if it is confirmed that this is done in “national interest” according to insider sources.

It is likely that this would need both the support of the president as well as Congress for this to actually be implemented, however.

So far, the Biden administration ahs already called for the further examination of crypto and digital assets where some of the actions seemed pro-crypto.

Whether or not that will influence legislators to actually pass a law that will allow the Fed to create a CBDC is still to be determined.

CoinDesk reports:

President Joe Biden’s executive order this past March called for crypto recommendations from several corners of the federal government, and many of those reports have come due.

The Treasury’s document on how to handle the question of a digital dollar – expected to be released in the coming days – is among the most eagerly awaited, because issuing such a token could upend the digital assets industry and have major implications for consumers’ relationships with traditional banks.

Still, the final decision on issuing a CBDC belongs with the Fed board, and Chair Jerome Powell – along with other senior Fed officials – has repeatedly stated the central bank won’t move without support from the administration and Congress. So far, the Fed has been reticent to clarify what congressional approval needs to look like, despite Republicans’ best efforts to dig out a response.

The Department of Justice may soon answer whether the project requires the backing of a new law when it issues its own crypto report. If Justice says the president is the only one who needs to decide whether a CBDC is in the country’s best interest, Powell and the board will have a choice to make: What signal of support do they need from Congress?

This so called “Future of money” report can be considered a important step towards the creation of a CBDC because it at least suggests potential ideas of how it will be created.

Many speculators believe that the trial runs of the CBDC are already happening as many other countries around the world have already been conducting trials as well.

Therefore, some of the stuff in this report may come sooner than expected which would mean big things for the blockchains that would power the CBDCs.

So far, Ripple is one of the only blockchains that provides a CBDC platform and could stand to benefit from this emerging trend.

CoinDesk conludes:

The industry inadvertently shoveled some fuel into the CBDC fire this year when one of the largest stablecoins – algorithmic terraUSD (UST) – imploded and sent damaging shockwaves through the rest of the crypto infrastructure.

Since then, regulators and lawmakers have been wary of stablecoins, which are meant to be the steadiest part of the crypto market because of their ties to underlying assets such as the dollar.
CBDCs have also been praised as a possible solution for widening financial access to consumers who don’t, or can’t, use banks.

“Unlike private digital assets, a CBDC issued by the Federal Reserve would be backed by the full faith and credit of the U.S. government, like the dollar bills in our wallets,” said Rep. Maxine Waters, (D-Calif.), the chairwoman of the House Financial Services Committee, in a statement earlier this year.

She said a digital dollar could “hold the promise of deepening financial inclusion for underserved communities as more economic activity moves online.”

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