WASHINGTON | Will the dollar change the era and with it all global finance? US President Joe Biden will launch work on a “digital dollar” on Wednesday, but pledges the utmost caution in the face of the plethora of risks associated with such an innovation.
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Faced with the global rise of cryptocurrencies such as bitcoin and the growing use of digital payments, the president signed a decree asking the Ministry of Economy to present a report on “the future of money” within six months.
In particular, he wants to know in more detail the advantages and disadvantages of the possible creation by the United States of a central bank digital currency (MNBC).
At the same time, he asked the US central bank (Fed) to study the steps to be put in place for the possible launch of a digital dollar.
If successful, this project could revolutionize global finance, over which the dollar reigns supreme. But the project carries a number of risks: undermining the traditional banking sector, protecting user privacy, using it for criminal purposes, dangers to state security and much more.
“We have to be very, very careful in our analysis because the implications” of adopting a digital dollar would be “very profound for the country whose currency is the main global reserve currency,” stressed a senior White House official, on condition that anonymity during a press conference.
The senior official assured that more advanced digital currency projects in other countries or currency areas “do not threaten” this dominance of the dollar, a financial asset, but also a real strategic weapon for the United States, as illustrated by the sanctions taken against Russia. .
According to the White House, more than 100 countries are considering launching or have already experimented with digital currencies. One of the most advanced is China, a great rival to the United States in the economic, political and strategic domination of the world.
coins and banknotes
An “official” digital currency is the dematerialized equivalent of coins and notes, which are effectively direct claims to central banks.
It can therefore, in theory, be used without going through a bank, which is currently required for dematerialized payments.
States want to avoid leaving this space to private actors or foreign powers.
Economy Minister Janet Yellen stressed that her teams “will assess the potential risks of digital assets to financial stability and determine whether the necessary safeguards are in place.”
This “digital dollar” project is part of a vast offensive that Joe Biden wants to launch to bring some order to the proliferation of private cryptocurrencies, which are extremely volatile and by nature fully decentralized.
The decree also calls on various government agencies to identify and combat the multitude of risks linked to this phenomenon: for consumers, for international financial stability, for companies that are victims of cyber attacks and condemned to pay their attackers in cryptocurrencies, linked money laundering. and, finally, for the security of States.
On this last point, a senior US administration official assured that the US executive would “continue to vigorously combat” any use of cryptocurrencies “to avoid US sanctions, and this also applies to Russia”, referred to by the heavy Western economic retaliation since the invasion. from Ukraine.
US national security adviser Jake Sullivan and Joe Biden’s top economic adviser Brian Deese, however, stressed in a joint statement that “governments cannot solve these problems alone, especially a government working in isolation.”
They assure that the United States is committed to “working with its allies” in this titanic project.
For Mark Sobel, a former Treasury official now at the Center for Strategic and International Studies, the executive order is “a welcome step” in preparing the United States for a new environment where cryptocurrencies, digital currencies backed by a state currency and coins. In his opinion, a law should be made, rather than letting government agencies regulate, in order to ensure financial stability while at the same time encouraging innovation.