Home Coins Libra (LIBRA) The US Risks Getting Left Behind on CBDCs

The US Risks Getting Left Behind on CBDCs

- Advertisement -


This week, as world leaders gather virtually for DC Fintech Week in Washington, D.C., a key focus will be on central banks issuing their own digital currencies (CBDC). A pivotal player here is the United States, which faces an increasingly urgent decision: whether to take serious steps towards issuing a CBDC, as the Bank of China and others have begun. The sooner it decides, the better.   

Many countries are addressing this issue seriously and quickly, as surveyed by tracking projects at the Atlantic Council and elsewhere. Pilot programs are ongoing in multiple nations, most notably China, which recently ran a trial with 50,000 residents of Shenzhen – reigniting concerns about its rapid progress and geostrategic implications. By contrast, the U.S. remains comparatively cautious and quiet. 

The authors are attorneys and advise digital currency projects at the law firm of Schnapper-Casteras PLLC. JP Schnapper-Casteras is also a Non-Resident Senior Fellow at the Atlantic Council, focusing on CBDCs and financial technology regulation.

On CBDCs, Federal Reserve Chairman Jerome Powell said this week that it is more important for the U.S. to “get it right than to be first.” The most concrete CBDC exploration is at the Federal Reserve Bank of Boston, which is collaborating with MIT to survey 30-40 available technologies over two to three years. Treasury Department officials hint more work is happening behind the scenes, but little has been made public.

If the U.S. wants to lead on CBDCs, there is much more it could reasonably do, and soon – even short of being “first.” It could test out several pilot projects at the same time, as underscored by the Digital Dollar Project (a group led by Chris Giancarlo, former chairman of the Commodity Futures Trading Commission) and along the lines of what the Bank of France and People’s Bank of China are already undertaking.

U.S. stakeholders, including Congress, should start wrestling with the crucial and complicated issues of the digital dollar’s design, including the paramount issue of privacy. Giancarlo stressed that may turn out to be “ace to play in the contest for the future of digital money” and could help contrast the “digital dollar” against other nations’ CBDCs that reflect different values and priorities.

If, on the other hand, the U.S. wants to continue waiting while other countries move forward on CBDCs, it could lean into a substantial role for the private sector. The prospect of private sector “digital dollars” scared some policymakers when Facebook announced its libra cryptocurrency last June, but recently Powell and his colleagues have started looking favorably at different forms of private-sector collaboration. In the absence of a clear national policy, the private issuance of “digital dollars” is already happening, evidenced by the surge in privately issued “crypto-dollars,” a phenomenon profiled by Coin Metrics cofounder Nic Carter. 

What could be even worse is waiting, and getting left behind.

Moreover, the Treasury’s Office of the Comptroller of the Currency (OCC) recently gave banks the okay to hold bank reserves on behalf of certain “digital dollar” issuers. If the U.S. engages the private sector, we believe it should embrace and demand the model that worked for the early internet: open-source and interoperable technology standards. 

At one level, the Federal Reserve’s current “wait and see” approach is understandable: It is a historically conservative institution and, as the issuer of the world’s reserve currency, has much to lose if its CBDC efforts flounder. Cybersecurity flaws might scotch a digital dollar launch, for example.

Still, there is surely a greater cost to all this waiting. 

As CFTC Chairman Heath Tarbert candidly admitted on Monday at DC FinTech Week, “The only thing that scares me is the U.S. falling behind [on CBDCs].” 

See also: Chris Giancarlo – Don’t Rush Digital Dollar During COVID-19 Crisis

Other countries that move earlier on CBDCs may stand to gain from that first-mover advantage: reaching or surpassing the United States on infrastructure, establishing industry standards or expanding their spheres of influence via digital currency adoption. 

Domestically, moving too slowly and maintaining the status quo could deprive the U.S. of new and important fiscal and monetary tools, including the ability to rapidly and precisely disseminate stimulus funds directly to citizens during a recurring pandemic or lingering depression. 

In the worst case, the U.S. would muddle along the next few years with the worst of both worlds: neither material progress on national financial infrastructure nor enhanced regulatory clarity or open standards for private providers. 

The United States faces a pressing decision about whether to join other countries and start working, openly and urgently, on a digital currency that would complement paper cash. As tough as the decision may be, what could be even worse is waiting and getting left behind. 

cd_live_fintech_week_endofarticle_v2





Source

- Advertisement -
Mr Bitcointe
Mr Bitcointehttps://www.bitcointe.com/
“Fact You Need To Know About Cryptocurrency - The first Bitcoin purchase was for pizza.” ― Mohsin Jameel
472FansLike
76FollowersFollow
4,567FollowersFollow
5,261FollowersFollow
1,555FollowersFollow
2,230SubscribersSubscribe
USD - United States Dollar
EUR
1.21
GBP
1.34
CHF
1.11
NOK
0.11
JPY
0.01
CAD
0.77
AUD
0.74

Most Popular

Eth2 withdrawals are coming sooner than you think

Withdrawals for Ether staked on Ethereum 2.0 could become available as early as Q1 2021, according to a blog post by staking service...

Reuters runs the headline Bitcoiners have longed to read

The U.S. Dollar Index fell sharply today, extending a 10 month losing streak that places it at the lowest point since April 2018. International news...

Ethereum Scalability Solutions, Connext and Stakenet | XSN Research | by Shahab Behzadi | Dec, 2020

There have been many attempts at upgrading blockchain infrastructure, with the very first one being Lightning Network, which is arguably as old as...

Ethereum’s market cap surpasses GM, CME, and tech stocks — What’s next?

2020 has been an impressive year for the Ethereum network and Ether (ETH) price. In November the Eth2 deposit contract quietly launched and before...
bitcoin
Bitcoin (BTC) $ 18,700.80
ethereum
Ethereum (ETH) $ 586.69
ripple
XRP (XRP) $ 0.608500
tether
Tether (USDT) $ 1.00
bitcoin-cash
Bitcoin Cash (BCH) $ 290.52
bitcoin-cash-sv
Bitcoin SV (BSV) $ 169.29
litecoin
Litecoin (LTC) $ 85.64
eos
EOS (EOS) $ 3.02
binancecoin
Binance Coin (BNB) $ 30.20
okb
OKB (OKB) $ 5.23
tezos
Tezos (XTZ) $ 2.34
leo-token
LEO Token (LEO) $ 1.37
cardano
Cardano (ADA) $ 0.153499
monero
Monero (XMR) $ 127.75
stellar
Stellar (XLM) $ 0.181049
chainlink
Chainlink (LINK) $ 13.46
huobi-token
Huobi Token (HT) $ 3.99
tron
TRON (TRX) $ 0.030459
usd-coin
USD Coin (USDC) $ 1.00
dash
Dash (DASH) $ 103.74
neo
NEO (NEO) $ 17.71
iota
IOTA (MIOTA) $ 0.326957
nem
NEM (XEM) $ 0.187738
zcash
Zcash (ZEC) $ 74.80
maker
Maker (MKR) $ 542.66
paxos-standard
Paxos Standard (PAX) $ 1.00
ethereum-classic
Ethereum Classic (ETC) $ 6.26
vechain
VeChain (VET) $ 0.014925
true-usd
TrueUSD (TUSD) $ 1.00
ftx-token
FTX Token (FTT) $ 4.46
kucoin-shares
KuCoin Shares (KCS) $ 0.821370
waves
Waves (WAVES) $ 6.81