The idea of a country, or central bank, creating its own cryptocurrency has become far less unusual in recent times. China is edging ever closer to launching its coin; Venezuela has the Petro while there is also talk in Iraq in India about a government coin. However, will the USA be the latest to join the list?
It is not only the general public that wants to know if the US has any such plans, members of the United States House of Representatives Financial Services Committee recently asked the Federal Reserve whether there are any plans of launching a US digital currency.
The reason this question is emanating is because, as the opening line of the letter from Federal Reserve Board Chairman Jerome Powell, U.S. Representatives French Hill, and Bill Foster states, is because “the nature of money is changing.”
The general concerns are that there is a clear understanding that fintech and other changes in money are starting to push the need for the advancement and digitalization of currency. One part of this is also the emergence of cryptocurrencies, as well as wide adoption of digital fiat currencies.” the letter stated:
“Internationally, the Bank for International Settlements conducted a study that found that over 40 countries around the world have currently developed or are looking into developing a digital currency.”
Essentially, there is an arms race developing across the globe with regards to digital currencies, and the US is in danger of being left behind. Governments are recognizing that digital currencies can take on the same, if not better, utility of physical cash. However, the lawmakers are also aware that the Federal Reserve can be the one to mandate a safe, regulated, and secure digital currency.
It is important that these types of questions are being asked as there is a tipping point about to happen that involves the digitization of currencies and other fintech movements. Cryptocurrencies, such as Bitcoin, have shown that there are other ways to affect currency and payment in a digital manner, and they have opened the way for governments, as well as banks, to start experimenting.
In the US as well, the likes of JPMorgan are creating their own digital currency, and rival Wells Fargo is following suit. The advantages that come from these types of currencies allow for huge advantages in a digital, globalized world, and it is unsurprising that governments are starting to get interested.