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

Institutional FX

Integral also grapple with weak FX volumes in December

Foreign exchange trading volumes dropped in December across Integral’s trading platforms as many traders were away on annual leave and currency markets saw a relatively quiet period. December volumes outpaced those of last year, though turnover is still down month-over-month.

Digital Assets

BitMEX to turn German bank into regulated crypto products powerhouse in Europe

The historic German bank is already a leader in the application of blockchain technology and offers a range of digital assets banking services, including custody, tokenization, efficient payment transactions, and regulatory secure market access.

Industry News

CryptoUK appoints Teana Baker-Taylor as non-executive director

“CryptoUK is moving the needle on policy and regulatory framework development to ultimately build trust and protect all participants, from retail investors to the crypto industry players”

Retail FX

Skilling raises €10m to expand brokerage further after triple-digit growth in 2021

“This fundraising round represents the beginning of the next phase of Skilling’s growth as we further assert ourselves in the fintech industry”

Industry News

oneZero adds two more FX veterans, Indu Maheshwari and Kevin Verardi

The news of Indu and Kevin’s appointments comes a month after Jim Sullivan was announced as the company’s General Counsel, where he will be responsible for the company’s global legal function, based in New York.

Technology

Pareto Securities goes live with Broadridge’s OMS for low and high touch agency trading

The solution combines order management, market connectivity and smart order router (SOR) components developed by Itiviti, which was acquired by Broadridge last year in a $2.5 billion deal.

Retail FX

INGOT Brokers taps Acquity and Signal Centre for MT4/5 EAs and news analytics

INGOT Brokers is helping traders cut through the noise and get a clearer picture of the emerging market trends as well as better spot trading opportunities with AI-powered signals.

Digital Assets

Can the Ripple lawsuit be traded with Wrapped XRP to circumvent XRP delisting in US?

wXRP is a derivative product that is pegged to the digital asset that the SEC claims to be a security in what has been dubbed “the cryptocurrency lawsuit of the century”.

Digital Assets

e-CNY wallet downloads swell, but actual usage disappoints

China’s central bank has released a wallet app for payments and money transfers using the digital yuan earlier this month. Although the e-CNY wallet was the most downloaded app in January, but according to a Reuters report the actual use in transactions has been far less impressive.

<