It has become quite well established that digital currencies, or blockchain at least, will play an important role in the next technological revolution, as well as the future of money. This does not necessarily imply Bitcoin will be the future of currency, but perhaps Central Bank Digital Currencies (CBDC) will be the answer.
This has started being identified across many central banks, especially in China, but even in the UK, Japan, the EU and other western entities. However, one area where it has not been heavily picked up or expanded upon is in the USA. The US continues to have a rather blinkered view of cryptocurrencies and the underlying technology, which some feel is causing the major superpower to fall behind.
China is one nation that looks the closest to unleashing its full CBDC and the belief is that this will be a tool that helps China close the gap on the USA and its dollar hegemony. In fact, some even see this as the key for China to overtake the USA, especially given the slowness to react.
Now, calls have grown stronger that the US should be looking at a digital dollar as Christopher Giancarlo, the former chairman of the Commodity Futures Trading Commission (CFTC) believes it’s time for the Federal Reserve to issue a fully digital currency.
Giancarlo has highlighted, to Yahoo Finance, that the introduction of the digital dollar would help boost the eCommerce business, and thus the general economy, as there would be no intermediatory fees involved like with the traditional debit and credit cards. Giancarlo also added:
“When we talk about a digital dollar we’re talking about in the virtual world, to have that same immediacy of payment that we have in the analogue human world.”
But it not only about the added spending power this offers, Giancarlo has identified that there are already solutions out there that the US should be competing with. He said that Bitcoin and innovations like Facebook’s Libra have their own “value propositions” and could co-exist with a central bank-issued digital currency. He expressed that:
“I think the market is always better when there is a lot of competition out there… An instrument like Bitcoin may serve to the equivalent to the digital dollar might be equivalent to the digital gold.”
Giancarlo has also advocated that the US regulatory framework needs updates to adapt to the changes that cryptocurrencies bring to the financial institutions. He says:
“It’s going to change things dramatically and our laws need to evolve with that as they’ve done over the 90 years, now they need to evolve again.”