President Joe Biden on Wednesday ordered government agencies to begin work on creating a digital U.S. dollar. But first, he asked for a study to weigh the risks and benefits of the move, which could be a game-changer for the global financial system.
According to the White House statement, the decision comes amid the explosive growth of private cryptocurrencies such as bitcoin. In the new executive order, Biden urges various government agencies, including the Treasury Department, to examine issues such as consumer protection, financial inclusion and the use of digital assets for illegal activities. The reporting deadlines are pushed back from 30 to 180 days and will include consultations with the private sector.
For her part, Treasury Secretary Janet Yellen said the agencies will “assess potential financial stability risks associated with digital assets and assess whether appropriate safeguards are in place.”
If all goes well, the U.S. will join more than 100 countries that are exploring or have launched pilot programs with their own central bank digital currency (CBDC), including China’s digital yuan.
White House economic adviser Brian Deese told CNBC that “maintaining U.S. global leadership” is the main goal of the new project.
Digital assets, including cryptocurrencies, have seen explosive growth in recent years. They surpassed a market capitalization of $3 trillion last November, up from $14 billion five years earlier.
In addition, the White House said that about 16 percent of American adults – about 40 million people – have invested in, traded in or used cryptocurrencies. But “without oversight, the explosive growth in cryptocurrency use will be a threat to Americans, the stability of our businesses, our financial system and our national security,” the U.S. official said.
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