Treasury Secretary Yellen still cant decide on digital dollar

Karthik Subramanian

Treasury Secretary of the US, Janet Yellen, has said that she still is not sure whether the US should go ahead and have the digital dollar and follow the example of other major countries including China and India in introducing the same.

This comes against the backdrop of an increasing clamor among various countries, big and small, to ride on the CBDC bandwagon and we have been getting reports of many such experiments and pilots happening for the same.

The Need to Study the Risks

While some countries like Nigeria have gone ahead and created CBDCs for use by the public, others are in various phases of testing but by the looks of it, the US does not seem to be yet sure on whether it wants to introduce a digital dollar yet. There are some pretty long-term effects of a digital dollar and with the US dollar being the center of business for many parts of the world, the US has to think through a lot of items and their overall effect before it can choose to introduce a digital dollar.

“This is a decision that’s important and needs to command consensus. There are some benefits, but there are also meaningful costs,” Yellen said. “It can work to disintermediate the banking system. And, you know, we need to work through the pros and cons. I don’t have a view yet.”

Need for a Consensus

Internally, this decision would also need a consensus between the SEC, Congress as well as the Treasury and it is indeed going to be key to find out where the digital dollar would fit into the overall scheme of things and how likely it would be to affect the existing financial ecosystem. So far, there has been varied opinion within the US on whether it needs a digital dollar or not. On the one hand, there is the fear that it would be left behind in the growth of fintech if it chooses not to adopt a digital dollar while other countries go ahead with their CBDCs.

On the other hand, there is a need to be careful to ensure that the existing system is not disturbed which could turn out to be very risky in the future. This is probably the major risk that the regulators are also looking into and the more important the fiat currency is, the higher the risk that it is likely to be and hence the more careful that the regulators need to be.

Read this next

Retail FX

Italian watchdog red flags Olympus Brokers, UnicoFX and Allfina Group

Italy’s Commissione Nazionale per le Società e la Borsa (CONSOB) has shut down new websites in an ongoing clampdown against firms it accuses of illegally promoting investment products in the country.

Retail FX

XTB revenues hits zł1.45 billion in 2022, Q4 earnings disappoint

Poland-based Forex and CFDs broker, XTB has reported its final results for Q4 of 2022 and the full fiscal year ending on December 31, 2022, showing one of its most successful corporate years.

Executive Moves

Lirunex Limited recruits Waleed Salah as head of MENA sales

Maldives-based brokerage firm Lirunex Limited has secured the services of Waleed Salah, who joined the company in the role of its head of sales for the MENA region.

Executive Moves

Trading 212 parts ways with co-founder Borislav Nedialkov

Trading 212 has a void to fill at its FCA-regulated business in London, following the departure of two key players, Raj Somal and Borislav Nedialkov.

Digital Assets

Binance acquires troubled crypto exchange GOPAX

Binance, the world’s largest digital asset trading platform, has reportedly acquired a majority stake in the troubled South Korea-based cryptocurrency exchange GOPAX.

Digital Assets

Kraken exits Middle East, closes UAE office

Digital currency exchange Kraken will close down its operations in Abu Dhabi, UAE and lay off the majority of its team focused on the Middle East and North Africa.

Industry News

CFTC comments on ION Cleared Derivatives issues after Russian-linked hack

“The ongoing issue is impacting some clearing members’ ability to provide the CFTC with timely and accurate data. As this incident unfolded, it became clear that the submission of data that is required by registrants will be delayed until the trading issues are resolved.”

Industry News

FCA took down 14 times more misleading ads in 2022 thanks to technology

The FCA has made significant improvements to the digital tools it uses to find problem firms and misleading adverts. These improvements have enabled it to work through a much larger number of cases compared with 2021.

Executive Moves

HKEX appoints ex-Goldman Sachs Matthew Cheong to lead platform’s focus on derivatives

“He has worked for a number of the world’s leading investment banks and his experience will be invaluable to HKEX as we continue to enhance our derivatives product offerings and build on our innovative and robust platform business, connecting capital with opportunities.”