Digital Dollar Is a Long Way from Reality
Nellie Liang, the U.S. Treasury Department’s undersecretary for domestic finance, says that the need for a digital dollar doesn’t currently exist and that the U.S. might adopt a CBDC several years from now, if a lot of other countries do so first.
The Treasury Department’s top official for financial markets and stability expressed little urgency over the federal government’s need to prepare for the potential launch of a digital U.S. dollar.
Regulators need to examine whether a central bank digital currency (CBDC) would actually improve the speed or cost of real-time interbank payments, which the Federal Reserve is aiming to introduce in 2023, said Nellie Liang, undersecretary for domestic finance at the Treasury.
Asked whether a digital dollar would help defend the primacy of the dollar in international commerce or as a reserve currency, she was even clearer. “My view is our global leadership doesn’t come from our technology,” she said in an interview at Bloomberg News’s Washington office Monday. “It comes from our governance system, the rules that govern our financial markets, our rule of law, and the safety and soundness of our institutions.”
If, five years from now, many countries have introduced a CBDC, that might become a factor in pushing the U.S. to adopt one, she said. But she emphasized that the U.S. government’s study of a potential CBDC was mainly to be prepared for a need that didn’t exist earlier this year.
In a September report, the Treasury “set out a very deliberate, forward path for considering CBDC so that the Fed would be in a position to issue one if it decided it wanted to,” she said.
The Fed in January published a whitepaper on a prospective central bank digital currency, without committing to issuing one. Such a move, it said, would have to be made jointly with Congress and the executive branch.
“The Federal Reserve does not intend to proceed with issuance of a CBDC without clear support from the executive branch and from Congress, ideally in the form of a specific authorizing law,” the whitepaper said.
Views among the Fed’s Board of Governors vary. Governor Christopher Waller has emerged as a CBDC skeptic, while vice chair Lael Brainard has cast the issue in light of a more efficient payment system that could benefit the under-banked and global economic strategy.
Fed Chair Jerome Powell has shown no urgency to decide the matter soon.
See also:
- China Is Leading the Digital Currency Race
- India Pilots a CBDC
- UK Considers a CBDC
- Research and Development, and Developing a Point of View
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