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Biden orders government to investigate digital dollar and other cryptocurrency risks

Figure shows representations of virtual cryptocurrencies on US dollar banknotes
FILE PHOTO: Representations of virtual cryptocurrencies are placed on US dollar banknotes in this November 28, 2021 illustration. REUTERS/Dado Ruvic/Illustration

March 9, 2022

By Andrea Shalal and Katanga Johnson

WASHINGTON (Reuters) – U.S. President Joe Biden will sign an executive order on Wednesday asking the government to assess the risks and benefits of creating a central bank digital dollar, as well as other issues with cryptocurrencies, administration officials said.

Biden’s order requires the Treasury Department, the Commerce Department and other key agencies to produce reports on the “future of money” and the role that cryptocurrencies will play.

Widespread surveillance of the cryptocurrency market, which surged to over $3 trillion in November, is essential to ensure national security, financial stability and U.S. competitiveness and to ward off the growing cybercrime threat, officials said.

Analysts see the long-awaited executive order, first reported on Monday, as a clear acknowledgment of the growing importance of cryptocurrencies and their potential impact on US and global financial systems.

One of its key actions is directing the US government to evaluate the technological infrastructure required for a potential Federal Reserve Bank of America (CBDC) digital currency — an electronic version of dollar bills in your pocket.

In January, the Federal Reserve put a question before Congress on whether the United States should aim for a digital dollar, with leading analysts predicting such a project would take years.

But an official said the United States would move forward with developing a digital dollar, albeit with caution given the dollar’s role as the world’s main reserve currency.

“We have to be very, very careful with this analysis because the implications of our movement in this direction are profound for the country that issues the world’s main reserve currency,” the official said.

The regulation also encourages the Federal Reserve to continue research and development efforts.

Nine countries have adopted central bank digital currencies, and 16 others — including China — have started developing such digital assets, according to the Atlantic Council, leading some in Washington to fear the dollar could lose some of its dominance to China.

The US dollar continues to be underpinned by important fundamentals, including a commitment to transparency, the rule of law and the full independence of the Federal Reserve, the official said.

“The role of the dollar has been and will continue to be critical to the stability of the international monetary system as a whole. Foreign central bank digital currencies and their adoption in and of themselves do not threaten that dominance.”

The United States will monitor developments with a view to maintaining the dollar’s centrality in the global economy, the official said.

In addition, the order calls for authorities, including the Securities and Exchange Commission and the Consumer Financial Protection Bureau, to review other issues raised by cryptocurrencies, including systemic risk and consumer protections.

A key goal is to address inefficiencies in the current US payments system and promote financial inclusion, particularly among poor Americans, about 5% of whom are currently unbanked due to high fees, an official said.

“To date, there has not been an organized effort to bring together the expertise and authorities of the entire US government to develop a holistic approach to digital assets,” another official added.

(Reporting by Andrea Shalal and Katanga Johnson in Washington; Editing by Michelle Price & Simon Cameron-Moore)

https://www.oann.com/biden-orders-government-to-study-digital-dollar-other-cryptocurrency-risks/?utm_source=rss&utm_medium=rss&utm_campaign=biden-orders-government-to-study-digital-dollar-other-cryptocurrency-risks Biden orders government to investigate digital dollar and other cryptocurrency risks

DUSTIN JONES

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