The White House says digital currency has benefits. However, some risks range from “stability of the financial system” to “protection of sensitive data”.
WASHINGTON DC, DC— Editor’s Note: The above video is from March 8, 2022.
The Biden administration has released goals and analysis for the possibility of a digital dollar. The White House Office of Science and Technology released a report on Friday outlining how a digital dollar could work with an increasingly digital economy.
“A United States central bank digital currency (CBDC) would be a digital form of the US dollar,” according to the report sent by the White House. “Although the United States has not yet decided whether it will pursue a CBDC, the United States has been carefully considering the implications and options for issuing a CBDC.”
The White House says millions of people around the world own digital assets, including 16% of American adults. Although more and more people are becoming familiar with digital forms of currency, there are risks.
Eswar Prasad, a Cornell business professor who studies the digitalization of currencies, said the Treasury report “takes a positive view of how a digital dollar could play a useful role in increasing payment options for individuals. and businesses” while recognizing the risks of its development.
He said the report paves the way for the creation of regulations and agency laws “that can improve the benefit-risk trade-off associated with cryptocurrencies and related technologies.”
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In March, President Biden signed an executive order, and for months government agencies said they were seeking to create a framework.
One of the biggest concerns Americans have with digital currencies is security. The White House claims that many of these forms of digital currency mislead people and that “nearly a quarter of digital coin offerings had disclosure or transparency issues, such as plagiarized documents or false promises of returns.” guaranteed”, according to a study.
There are also concerns about scams and fraud, with the FBI saying monetary losses from digital assets were nearly 600% higher in 2021 than in 2020.
The Biden administration says the current financial system isn’t working, leaving an estimated 7 million Americans without a bank account.
“An additional 24 million people depend on expensive non-banking services, like cashing checks and money orders, for their day-to-day needs. And for those who use banks, paying with traditional financial infrastructure can be expensive and slow, especially for cross-border payments,” according to a White House statement.
Some of the steps that the White House says must be completed before moving to more digital currency include:
- Work with financial institutions to build their capacity to identify and mitigate cyber vulnerabilities.
- Identify, track and analyze emerging strategic risks related to digital asset markets.
- Develop a digital asset research and development program.
- provide innovative U.S. companies developing new financial technologies with regulatory advice, best practice sharing, and technical assistance through things like tech sprints and innovation hours.
- Monitor the environmental impacts of digital assets; develop performance standards; provide local authorities with the tools to mitigate the damage.
The White House said the Financial Stability Oversight Board will release a report in October that will examine regulatory gaps and make recommendations for financial stability.
Read the full report below:
The Associated Press contributed to this report.