The White House punted on whether it was ready to support the creation of a digital dollar, which would have allowed the United States to further adapt to the evolving crypto industry and help strengthen the dollar’s dominance in competing with China.
The White House released a fact sheet on Friday announcing several new financial and technological initiatives to help the U.S. succeed in the race to innovate in the financial tech industry. However, it said it would put off decisions about approving the creation of a Central Bank Digital Currency, a government-created digital token compatible with the cryptocurrency marketplace. The White House instead emphasized that it was having several federal government members cooperate to research all the benefits and risks associated with such a token.
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Proponents have said a digital dollar could create efficiency in the financial system and accelerate payments. Critics, though, have warned it could lead to a loss of privacy.
The Treasury Department would lead an interagency group to “consider the potential implications of a U.S. CBDC, leverage cross-government technical expertise, and share information with partners,” according to the White House.
This group will include leaders from the Federal Reserve, the National Economic Council, the National Security Council, the Office of Science and Technology Policy, and the Treasury Department. It will share updates between agencies as it develops. While several reports from federal agencies appeared to support the creation, the White House said there was still much to do about research.
When asked if legislative action from Congress would be required to create a CBDC, senior White House officials said they still needed to do additional research before making a statement.
If a CBDC is to be adopted, it will need to ensure that it can “protect consumers, promote economic growth, improve payment systems, provide interoperability with other platforms, advance financial inclusion, protect national security, respect human rights, and align with democratic values,” according to the White House.
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The White House also emphasized efforts to promote access to affordable financial services and cooperate with financial institutions to account for cybersecurity vulnerabilities. Federal agencies also said they would cooperate with U.S. firms that are developing financial technologies by providing regulatory guidance and helping them track their environmental impacts.
