US President Joe Biden has signed an executive order (EO) “outlining the first ever, whole-of-government approach to addressing the risks and harnessing the potential benefits of digital assets and their underlying policy” including the possible issuance of a US central bank digital currency (CBDC), the White House says.
The EO places “urgency on research and development of a potential United States CBDC, should issuance be deemed in the national interest” and “directs the US Government to assess the technological infrastructure and capacity needs for a potential US CBDC in a manner that protects Americans’ interests”.
More specifically, it requires the US Secretary of the Treasury to present a report “within 180 days” that includes an analysis of the potential implications of issuing a digital dollar on economic growth and stability, financial inclusion, national security and law enforcement issues, as well as of the potential relationship between a CBDC and private-sector digital money and “the extent to which foreign CBDCs could displace existing currencies and alter the payment system”.
The EO also “encourages the Federal Reserve to continue its research, development, and assessment efforts for a US CBDC, including development of a plan for broader US Government action in support of their work. This effort prioritizes US participation in multi-country experimentation, and ensures US leadership internationally to promote CBDC development that is consistent with US priorities and democratic values.”
“The implications of potentially issuing a digital dollar are profound. They’re extremely wide-ranging,” a senior administration official told a White House press call.
“So this EO pulls together the expertise from across the US government. It also pulls in expert views and perspectives from a range of stakeholders in the country.
“This is all about the future of the payments system in this country, the future of credit creation, commercial banking.
“We know the implications for national security, our ability to show leadership in setting global payment standards for privacy and security, but also reinforcing the efficacy of sanctions or potentially influencing the growth of private cryptocurrencies that we know are growing to a material scale and, in some cases, have facilitated illicit finance and financial stability.
“All of these issues are tied up in the question of whether to issue a digital currency and, if so, how to do so in a way that advances our strategic objectives.
“So this is a way to organize ourselves with urgency so that we have a coherent and coordinated view on digital assets and that it’s articulated at the very highest level of our government.”
The US Federal Reserve published a study examining the potential benefits and risks of issuing a CBDC and launched a public consultation on the possible issuance of a digital dollar in January.