Digital dollar coming? US government is about to issue ultimatum

The guideline will come through three pending reports related to public and private projects to digitize the global reserve currency (Image: Pixabay/petre_barlea)

O dollar starts to enter the era crypt, and the government of U.S is about to give the clearest signal as to how this could happen.

The guideline will come through three pending reports related to public and private projects to digitize the global reserve currency.

First, the Federal Reserve Board will release a document later this month on the US payments system that is expected to provide guidance on the feasibility of issuing a central bank digital currency.

Soon after, the Boston Fed will publish the long-awaited research and open source computer on the technology that can sustain a digital dollar. Finally, the President’s Working Group on Financial Markets is expected to announce policy recommendations on how to regulate calls stablecoins, or digital dollars created by private companies.

When put together, the three reports will provide a roadmap for the financial community on how the Fed and the government Biden they see the future crypto of the dollar, the extent to which they support the adoption of a digital currency and the safeguards they may deem necessary to protect individuals and investors in what is currently a largely unregulated market segment.

What was once seen as a distant project gains an increasing sense of urgency as the value of digital assets jumps to about $2 trillion. In addition, other countries such as China they are rapidly moving forward with plans for their own sovereign digital currencies.

“This changed from ‘It’s an interesting idea’ a few years ago to ‘We need to have a pilot project,’” said Josh Lipsky, director of the Atlantic Council’s GeoEconomics Center, of a digital dollar issued by the Fed.

The Fed Board document is expected to focus on the US payments system as well as the prospects for a Fed-issued digital currency.

In recent months, Fed members have been divided over the usefulness of creating a digital dollar. Fed vice president for oversight Randal Quarles said the benefits of such a currency were “unclear” and the risks “significant and concrete.”

Proponents of central bank digital currencies, or CBDCs, say they can speed payments, reduce costs and increase access to the financial system for those without bank accounts. However, there are also risks.

A group of world central banks, which include the Fed, the Bank of England and the European central bank, published a report last week warning that CBDCs can accelerate bank runs by facilitating withdrawals during a crisis.

The final issuance of a CBDC would take years, and the Fed would prefer that Congress pass legislation authorizing the issuance, said the Fed chairman, Jerome Powell.