The US, as one of the world’s biggest economic superpowers, has been relatively slow on the digital currency uptake. The US is not exactly against Bitcoin and other cryptocurrencies in the same way that China is, but it’s overall scepticism of the industry actually pits it behind China in the blockchain arms race.
Many feel that the US could be shooting itself in the foot with its lacklustre approach to adopting blockchain technology and the financial aspect of cryptocurrencies which offer a digital alternative. The way in which the US shot down Libra hints at its unwelcomed approach to new digital currency innovation.
However, while other countries, including China, start looking into the possibility of Central Bank Digital Currencies, so now the US has shown signs of interest too. A member of the United States Federal Reserve’s board of governors has signalled that the institution is more open to the idea of central bank digital currency than previously.
Lael Brainard, who chairs several Fed committees, made remarks during a speech at a symposium on the future of payments at the Stanford Graduate School of Business.
Research and experiment
Considering that the US’s general approach to digital currencies has been one where they are happy to ignore them, the statement from Brainard is encouraging, she said the Fed was “conducting research and experimentation related to distributed ledger technologies and their potential use case for digital currencies, including the potential for a CBDC.
The timing of this new interest in a CBCD seems to have come at just the right time considering that, in Davos, earlier this year, big steps were taken to get CBDC off the ground by major central banks.
And, with a new appreciation of the technology and cryptocurrency, Brainard argued that it is essential for the Fed to remain “on the frontier of research and policy development regarding CBDC.”
A battle with China
Another contributing factor to the renewed interest in cryptocurrencies from the Fed may come down to the progress that China is making with its cryptocurrency. The Chinese CBDC is getting close to launch and is setting itself up to be a powerful tool for the Chinese in their battle for supremacy globally against the USA.