On Wednesday, March 9, 2022, Joe Biden, the current President of the United States, announced the inauguration of a digital dollar project. he is central bank digital currency (MNBC) It will be under the control of the US Federal Reserve, a wholly independent agency from the government.
This initiative aims to provide: “Promotes greater access to the financial system with efficient and low-cost transactions and less risk from privately managed digital assets, particularly for cross-border transfers and payments.”says Joe Biden in the executive order issued by the White House.
According to the Democratic president, the issuance of a digital dollar that is less risky than a cryptocurrency like Bitcoin or Ether is urgent. Proponents of the initiative promoting banking participation. In the United States, 5% of households do not yet have a bank account.
Why is the US rushing to create the digital dollar?
This digital dollar aims to meet enthusiasm for cryptocurrencies. According to the Washington press release, 16% of adults living in the United States have invested in crypto assets. Biden administration, with its dematerialized dollar a central alternative to digital currencies.
war in ukraine indeed, it has brought cryptocurrencies back to the fore. Cryptocurrency transfers exploded in two hostile countries after the collapse of the Russian ruble and banking restrictions in Ukraine. In this context, Washington fears that Russian oligarchs and billionaires close to the Kremlin will rely on cryptocurrencies to circumvent financial sanctions.
Some senators expressed their concerns on this issue in an open letter to US Treasury Secretary Janet Yellen. MPs say they’re scared “criminals, rogue states and other actors are using digital assets and alternative payment platforms as a new way to conduct cross-border transactions for nefarious purposes”.
In line with the digital dollar project, Joe Biden therefore asked government agencies to: develop cryptocurrency regulatory policies. However, there are already many laws aimed at regulating the use of digital currencies to combat terrorism financing or money laundering. Most platforms require the trader to provide some identification information (such as a bank) before making a deposit. That’s why senators point their finger at the services of DeFi, decentralized finance.
Joe Biden is trying to catch up with some big foreign powers, including China, with his digital dollar. The Chinese regime has deployed the digital currency on its territory. crypto yuan.
Based on a centralized blockchain, the digital yuan aims to establish Beijing’s sovereignty over Chinese citizens. With this currency, Xi Jinping’s communist regime could control all funds exchanged in the country. Above all, the digital yuan aims to dethrone the US dollar as the reference currency in the world. More than 100 countries plan to launch digital currency Washington says next year.
Potential Dangers of the Digital Dollar
The rise according to Joe Biden “Digital Assets Create Opportunity to Strengthen American Leadership in the Global Financial System”. Despite the enthusiasm of the Presidency, the digital dollar may take several years to build. The tenant of the White House points a finger.there are many natural hazards to the creation of a central bank digital currency. For this reason, the US administration plans to proceed cautiously.
First, the digital dollar would be entirely in the hands of the United States Federal Reserve. Assets held by US citizens will then be held directly by the central bank. The role of commercial banks should then be thoroughly reviewed. This approach, which aimed to eliminate bank charges, risked disrupting the functioning of banks by greatly reducing the money held by the banks. Either way, the digital dollar isn’t expected to surface for several years.
