Digital dollars may not happen soon. Here’s why?
On the board of governors of the U.S. Federal Reserve System, Christopher Waller has said that he does not want a digital dollar to be used in the U.S. Governor Waller said in a speech at a Harvard National Security Journal-hosted symposium in Cambridge. On the other hand, if you are into trading, then you may use this app that comes with useful tools that may help traders boost their trading skills.
The governor said he disagreed and gave a few reasons why. He says that the main reasons why the dollar is the most crucial currency have little to do with how technology changes. Since these things are true, the dollar is the most important currency. The dollar is the most critical currency because the United States has strong financial markets, important foreign exchange transactions, and robust billing.
The dollar is also the reserve currency used most often around the world. Using a CBDC won’t change the main reasons why we do things. He went on to say that because of all of these things, it’s unlikely that another sovereign currency will ever replace the dollar. This is because the dollar is given out as a digital asset.
He said that the real reasons why the dollar is the most common currency have little to do with technology, and I don’t think a CBDC would change these real reasons in any way. He also said that the CBDC wouldn’t change the fact that the dollar is the most common currency. Stablecoins might be able to be backed by the Federal Reserve. Waller is about to say what he needs to say.
This happened after the White House studied what a digital dollar could do regarding technology. Even though the Federal Reserve published a paper about CBDCs in January, it hasn’t decided what to do about them yet. On the other hand, Waller thinks it’s a good idea to have stable cryptocurrencies tied to the dollar. He thinks letting people pay with stablecoins tied to the dollar could make the dollar even more important in other countries.
Why start a digital dollar?
Since banks, bank cards, and apps that take a cut of every payment wouldn’t be involved, transaction costs would go down or even go away.
People who like the plan say it would help the 5% of American families that don’t have bank accounts and make it easier for the government to pay out benefits. There are risks, like a bug or an attack on the system. There are also privacy concerns since the government could, in theory, see all transactions.
If the dollar were digital, banks might not be able to give out as many loans. This would hurt the economy because banks lend money to other people with the money that customers put in their accounts.
Can the US get back on the right track?
Jamiel Sheikh, who started CBDC Think Tank, said there is no proof that being the first to market has any significant or tangible benefits. Countries like the eurozone and India already have digital versions of their currencies.
On the other hand, he said that if the document fails because of unintended consequences, harmful use, or other problems, people might not trust the organization that made it.
Eswar Prasad, a professor at Cornell University, says, “Because the dollar is so strong, the U.S. can learn from other countries.”
Duffie says it might be better for the U.S. to use a properly made digital dollar than a cryptocurrency.
But he said he wasn’t sure if big central banks like the Fed, ECB, China, or Japan would let people from all over the world open accounts at the central bank. It was about how to get money from one country to another.
He said that if the US did this, it could mess up the financial systems of smaller countries, whose people might choose to use the digital dollar instead of their own money.
