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US Treasury Considers Blockchain Opportunities To Create Official Digital Dollar

Oct 12, 2020 | News
US Treasury Considers Blockchain Opportunities To Create Official Digital Dollar

Treasury officials, along with representatives from the Fed, are conducting their own research on digital currencies and blockchains, according to a statement by US Deputy Treasury Secretary Justin Muzinich at the Atlantic Council online seminar. This is the first stage in considering the possibility of creating a full-fledged digital dollar.

The main focus is on studying how national digital currencies (Central bank digital currency or CBDC) can be used to circumvent economic sanctions and protocols that work against money laundering and financing of terrorist organizations.

According to Muzinich: “Blockchain technologies can significantly increase the efficiency of money transfers and reduce their costs. Therefore, it is extremely important that officials encouraged and used them, and did not ban them out of hand without understanding the possibilities. ”

The Deputy Minister also noted that even a partial transition to CBDC would be fraught with a number of possible difficulties and problems. The main will be the sharp change in the money supply and various financial disruptions, especially if hackers can break into this system.

Also, negative consequences can be from a change in the repository of reserve currencies and the transfer of stablecoins from full to a partial reservation.

One of the reasons for such a sudden increase in official interest in the "digital dollar" was the intention of countries like China and South Korea to issue their CBDCs to reduce the influence of the American currency in the cryptocurrency space.

What is important - the use of this asset is being studied by serious organizations. In addition to the Fed, several federal regional banks, as well as researchers from Boston and MIT, have taken on this. Such a great interest made it possible not only to study the theoretical aspects of the problem but also to launch a series of experiments that will show how the country's economy will behave, depending on the increasing role of digital currencies.

We can say that the official competition for the prospects for dominance in the cryptocurrency space has begun. And the dollar has a significant head start here - the majority of the stable and already trusted stablecoins are pegged to it. But in general, for the industry, such competition is extremely useful. At least due to the fact that it will attract even more attention of institutional investors to blockchains, as well as it will become a reason for the introduction of a normal legislative framework regarding the regulation of cryptocurrencies.

Published on the EXBASE based on materials from forklog.com