The Central Bank of the United States is actively looking at options of issuing a digital currency. An official from the Federal Reserve confirmed this to Coindesk at a business event on Wednesday. The report comes at time when some fear that the dollar might lose its importance in the world economy as digital currencies are on the rise.
“We have not at the Fed decided to pursue or drive to develop a digital currency, but it’s something we’re actively looking at and debating.”Rob Kaplan, the President of the Federal Reserve Bank of Dallas (Coindesk)
The whole thing is not only about prestige. If another currency would become more dominant, the U.S. government will be at risk of suffering higher interest costs. Therefore the United States feels the pressure to create a digital currency that will have widespread adoption.
Kaplan also noticed the rise of Libra. Some lawmakers already warned earlier this year that Facebook’s digital currency could replace the dollar and undermine the stability of the US financial system. However, the threat is gone for now, as Mastercard, Visa, Paypal and others stepped away from the association. Their loyalty is still with the US dollar.
America definitely not first
Even though it’s Donald Trump’s favorite slogan, America won’t be first when it comes to cryptocurrencies. There are many countries with months or even years of advantage over the United States. Switzerland announced its central bank digital currency, China is will launch one soon, and Sweden already tested one.
Most central banks in the western world have been sleeping. The announcement of Libra has been a wake-up call to most of them. All around the world central banks are now looking at cryptocurrencies. They all see the benefits of a digital cryptocurrency over traditional money. ING Bank expects all central banks to issue a digital currency within the next three years.
Also published on Medium.