U.S. Treasury Says It's Getting 'Digital Dollar' Technology Ready The technology would need approval from lawmakers first.
By Gabrielle Bienasz •
Opinions expressed by Entrepreneur contributors are their own.
The U.S. Treasury's efforts to create a U.S. digital currency could be imminent, an administration official said, per Insider.
The Treasury is "engaging in the technological development...so that we would be able to move forward rapidly if [it] were determined to be in the national interest," said Nellie Liang, undersecretary for domestic finance at the Treasury, at an event on Wednesday.
This is one of the strongest signals yet that a "digital dollar" or central bank digital currency (CBDC) could soon be a reality in the U.S., pending Congressional approval, Insider reported.
Liang was speaking at an event hosted by the Atlantic Council's GeoEconomics Center, a foreign policy think tank.
What Is a Digital Dollar?
A "digital dollar" or CBDC, is a government-backed digital currency. As the Federal Reserve says, it is something that is easily available to the general public, just like cash.
While it has been common for decades to have money in a digital format, a CBDC would "differ from existing digital money available to the general public because a CBDC would be a liability of the Federal Reserve, not of a commercial bank." It could function along with cash, the Fed added.
The concept of a CBDC has come into the spotlight of late when the Chinese government began publicly testing a digital currency in 2020. It was even briefly floated in a pandemic stimulus bill in 2020. Scholars have argued benefits to the U.S., such as financial inclusion for people who are underbanked, and ways it could be implemented, such as even combining it with the Fed having the ability to hold bank accounts (something it has avoided since its inception.)
The U.S. Treasury has a working group for determining what a CBDC could look like, in collaboration with Federal Reserve and other groups, particularly in looking at issues like privacy, national security, and the dollar's role in the global financial system, Liang's prepared remarks said.
A digital dollar is different than cryptocurrency, per PBS, because it can't be mined by just anyone.
One expert also told the outlet that a CBDC "could go drastically in either direction" as far as privacy protection.
Lia Holland, communications and campaign director of Fight for the Future, a nonprofit digital advocacy group, told PBS that a government-backed digital currency would most likely not sell user information to marketers, unlike a private company.
On the other hand, she thought the ability to monitor digital transactions would be "incredibly tempting for legislators and lawmakers," she added to the outlet.
But nothing could happen without support from Congress. Last year, the "Electronic Currency and Secure Hardware (ECASH) Act" was introduced in the House by Representative Stephen Lynch (D-MA) to ask the Treasury to "support the development of an electronic dollar." It languished in committee.
