President Joe Biden will sign an executive order on Wednesday asking the government to assess the pros and cons of creating a central bank digital dollar, among other cryptocurrency issues, U.S. government officials said.
Biden’s executive order would require Treasury, Commerce and other major agencies to prepare reports on the “currency outlook” and the role cryptocurrencies play.
Officials say broad regulation of the cryptocurrency market is critical to ensuring U.S. national security, financial stability and U.S. competitiveness, as well as preventing the growing threat of cybercrime.
Analysts believe the long-awaited executive order, first announced on Monday, is a clear recognition of the growing importance of cryptocurrencies and their potential impact on the U.S. and global financial systems.
One of the key moves is to instruct the U.S. government to assess the technical infrastructure needed to pursue a central bank digital currency (CBDC). This digital currency is an electronic version of the dollar bill in your pocket.
In January, the U.S. Federal Reserve asked Congress whether the U.S. should pursue a digital dollar, leading analysts to predict such a plan would take years.
But one official said the U.S. would continue to push for a digital dollar, but cautiously, given the dollar’s role as the world’s main reserve currency.
“We have to do this analysis very, very carefully, because what we do in this regard has far-reaching implications for the United States, the issuer of the world’s major reserve currency,” the official said.
The executive order also encourages the Fed to continue its research and development efforts.
Nine countries have launched central bank digital currencies and 16, including China, have begun developing such digital assets, according to the Atlantic Council, leading some in Washington to worry that the dollar’s dominance could It will be handed over to China to a certain extent.
The official said the dollar remained underpinned by key fundamentals, including a commitment to transparency, the rule of law and the full independence of the Federal Reserve.
“The role of the U.S. dollar has been, and will continue to be, critical to the stability of the entire international monetary system. Digital currencies by foreign central banks and their rollouts themselves do not threaten this dominance.”
The U.S. will closely monitor developments to maintain the centrality of the dollar in the global economy, the official said.
Additionally, the order requires agencies including the U.S. Securities and Exchange Commission (SEC) and the Consumer Financial Protection Bureau (CFPB) to review other issues raised by cryptocurrencies, including systemic risk and consumer protection.
A key goal, one official said, is to correct inefficiencies in the current U.S. payment system and strengthen financial inclusion, especially for poor Americans — about 5 percent of whom are currently unbanked due to exorbitant fees.
Another official added: “Before today, there has never been an organized effort to bring together expertise and various departments across the U.S. government to help develop a comprehensive strategy for digital assets.”
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