Will the greenback change era, and with it all of world finance? US President Joe Biden launched work on a “digital dollar” on Wednesday, but pledged the utmost caution in the face of the multitude of risks associated with this innovation.
Faced with the global rise of cryptocurrencies like bitcoin and the growing use of digital payments, the president signed an executive order asking the Treasury Department to submit a report on “the future of money” within six months. . In particular, he wants to know in more detail the advantages and disadvantages of the possible creation by the United States of a central bank digital currency. At the same time, he asked the American central bank (Fed) to study the steps to be put in place for the possible launch of a digital dollar.
If successful, such a project could revolutionize global finance, over which the greenback reigns supreme. But the project carries a host of risks: challenging the traditional banking industry, protection of user privacy, use for criminal purposes, dangers to state security, etc. “We have to be very, very careful in our analysis because the implications” of adopting a digital dollar would be “very profound for the country, whose currency is the world’s main reserve currency,” stressed a senior. White House official, on condition of anonymity, at a press conference.
The senior official assured that more advanced digital currency projects in other countries or monetary areas “do not threaten” this dominance of the dollar, a financial asset, but also a real strategic weapon for the United States, as illustrated by the sanctions taken against Russia.
According to the White House, more than 100 countries are considering launching or have already experimented with digital currencies. One of the most advanced is China, the great rival of the United States for economic, political and strategic domination of the world.
Coins and banknotes
An “official” digital currency is the dematerialized equivalent of coins and notes, which are actually direct claims on central banks. It can therefore in theory be used without the transaction going through a bank, which is currently necessary for dematerialized payments. States want to avoid leaving this space to private actors or foreign powers.
Treasury Secretary Janet Yellen stressed that her teams would “assess the risks of digital assets to financial stability and determine whether the necessary safeguards are in place.” This “digital dollar” project is part of a vast offensive that Joe Biden wants to launch to bring some order to the proliferation of private cryptocurrencies, which are extremely volatile and by nature totally decentralized.
The decree also asks multiple government agencies to identify and combat the multitude of risks linked to this phenomenon: for consumers, for international financial stability, for companies that are victims of cyberattacks and ordered to pay their aggressors in cryptocurrencies, linked money laundering, and finally for the security of States.
On this last point, a senior official in the Biden government assured that the American executive “will continue to fight forcefully” any use of cryptocurrencies “to avoid American sanctions, and this also applies to Russia”, targeted by many heavy Western economic retaliation since the invasion of Ukraine.