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

Market News

Savvy Investors to Profit Whether the Stock Market Rebounds or Not

Equities have gone up enormously since the low. SP500 has gained 13.88% since June 17. In August, the indices drifted sideways. On Wall Street, veteran investors expect a move in either direction.

Industry News

Wall Street-backed MEMX obtains SEC approval for options trading platform

The company has raised more than $135 million in funding from 18 stock trading and investing heavyweights, including BlackRock, Citadel Securities, and Morgan Stanley.

Industry News

Amundi US launches ESG strategy that seeks to outperform S&P 500

Amundi’s Responsible investing team includes more than 45 specialists, and its ESG analysis covers more than 13,500 issuers across debt and equity.

Industry News

Verto launches embedded FX payments solution

The Verto API automates currency conversions, tracks payments and exchange rates in real-time, and is being launched in the follow-up of a $10 million in Series A funding last year.

Industry News

SEC awards over $16m to whistleblowers after another successful enforcement action

The program is 10 years-old and has arguably played a critical role in the Division of Enforcement’s ability to effectively detect wrongdoing, protect investors and the marketplace, and bring violators to justice.

Digital Assets

Ripple submits most succint explanation of Hinman issue in XRP lawsuit

It might be useful to get up to date as this could be the end of the road for the SEC.

Retail FX

TradingView integrates first Brazilian broker, Órama Investimentos

Órama offers all kinds of investment products, from fixed income to crypto-related funds.

Digital Assets

TRON approves Wintermute to mint, burn USDD stablecoin

TRON Reserve DAO has welcomed crypto market-making giant Wintermute as the ninth member and whitelisted institution to mint Tron network’s stablecoin, Decentralized USD (USDD).

Metaverse Gaming NFT

Nas Academy and Invisible College introduce innovative model for Web3 education

Singapore-based online learning platform, Nas Academy is joining forces with Invisible College to teach people everything they need to know about the Web3.