The United States (US) of America recently have been making their plans towards developing a digital dollars public.
Largely, the world superpower was awakened by the much progress China’s digital yuan achieved since they began exploring CBDC.
Now, the US is taking the technology (CBDC) seriously as it is said to be the future of money. Most recently, the U.S. Treasury Department secretary, Justin Muzinich disclosed that the department is evaluating the merits of a government-sponsored digital currency.
According to Muzinich, the deputy Treasury Secretary, they are studying a potential central bank digital currency (CBDC) tied to the dollar, alongside the Federal Reserve, the U.S.’ central bank.
“It’s something we’re studying … This is really a decision which sits as much with the Fed as it does with Treasury,” he said.
Muzinich also disclosed that both the Treasury Department and the Federal Reserve are part of an international working group evaluating digital currencies.
Apart from arguments that a digital Yuan could oust the US dollar of its global dominance, Munzinic pointed out that a distributed ledger is efficient and cost-beneficial. The secretary also said that the government is to embrace innovation and not be scared by it.
Previously on US CBDC
Last year, US Congress members French Hill and Bill Foster wrote a letter to Chairman Powell of the Federal Reserve. They inquired if the central bank was prepared for the rise of digital currencies.
Both lawmakers stated categorically in the letter that the dollar might be left behind by cryptocurrencies and private ‘stablecoins.’
In the wake of predictions that CBDCs and stablecoins could become the new global currency, Hill and Foster urged the Fed to look at building its own central bank digital currency (CBDC).
Earlier this year, progress was made regarding US CBDC. Accenture and the Digital Dollar Foundation published a whitepaper laying out proposals for developing a CBDC in the US.
The partnership aimed at ensuring US dollars dominance regardless of developments on how businesses are conducted globally.
Specifically, the project was to protect the USD’s status as the world’s reserve currency. This is in response to threats that other national governments are exploring launching CBDCs.
Apart from China’s CBDC, Facebook stablecoin project, Libra, JP Morgan’s fiat digital currency, Wells Fargo’s upcoming crypto project, have all set the tone and expressed why a CBDC has to launch in the US.
China continues to lead CBDC race
Earlier this week, China’s CBDC hit another milestone.
People’s Bank of China (PBOC) deputy governor, Fan Yi Fei, disclosed that digital yuan has been used to process transactions worth 1.1 billion yuan ($162 million). This is despite being in its pilot testing phase.
The currency hit this milestone months after the digital currency began its pilot test in selected provinces in China.
Digital Yuan would launch soon in China.