US Treasury Secretary Janet Yellen Points Out That a Digital Dollar Could Serve as Trustworthy Money

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US Treasury Secretary Janet Yellen Points Out That a Digital Dollar Could Serve as Trustworthy Money By Angel Di Matteo @shadowargel

In her speech, Yellen highlighted the benefits of the creation of a digital dollar by the US government, but also indicated that this requires a very detailed approach to properly assess the possible implications.

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US Treasury Secretary Janet Yellen recently indicated in a speech that a digital dollar issued by the local government could become reliable money, perfectly comparable to circulating cash.

This and other reflections on Yellen’s part came to the fore during an event held at the American University Kogod School of Business Center for Innovation, in which he made an extensive review of the perspective with which the US government has been addressing the issue of digital currencies, even reaching the possibility of issuing a CBDC to become the digital version of the US dollar.

Evolution of the crypto market, technology and blockchain

Yellen’s presentation began by reviewing the need to address cryptocurrencies and their associated market, which is why a few weeks ago the US president, Joe Biden, signed an executive order asking all US agencies to join efforts in this matter. :

“A few weeks ago, President Biden signed an Executive Order calling for a coordinated and comprehensive government approach to digital asset policy. Digital assets have grown explosively, reaching a market capitalization of $3 billion last November versus $14 billion just five years earlier.”

The need to address this market lies mainly in technological advances and how everyone can operate financially from smart devices, but the arrival of Bitcoin and cryptocurrencies also brought with them blockchain, thereby eliminating the problem of the transfer of value through Internet, everything in a decentralized and distributed way.

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After these and other details, Yellen reaches a point where she presents five lessons derived from the opportunities and challenges posed by new financial technologies, at which point she addressed the considerations of a digital dollar.

The utility of a digital dollar

In relation to this point, the Secretary of the Treasury reviewed the considerations that must be taken when sending funds internationally, highlighting that there are cases in which a single transfer would contemplate the payment of 10% in commissions, a fairly high figure that represents a setback for those who want to send remittances and economic support, so the idea of ​​a CBDC may be relevant:

“The development of our currency to its current form has been a dynamic process that took place over centuries. Today, monetary sovereignty and a uniform currency have brought clear benefits for economic growth and stability. Our approach to digital assets must be guided by an appreciation of those benefits. Some have also suggested that the introduction of a Central Bank Digital Currency, or ‘CBDC’, could contribute to a more efficient payment system. As a central bank liability, a CBDC could become a reliable form of money comparable to physical cash, but could offer some of the projected benefits of digital assets.”

However, the potential design of a CBDC would have to address the impact on the financial system, the ability to deal with crimes of a financial nature and other aspects related to national security, without neglecting possible implications for privacy and the ability of the currency in question to address macro policies under interaction with other forms of value.

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For this reason, President Biden’s executive order proposes a first approach based on this objective, since it will also allocate a space to evaluate what concerns a CBDC issued by the US government, a matter that has been described as a priority on several occasions by various officials.

Lessons from this work

Regarding the lessons that all this leaves behind, Yellen highlights that one of them is that the financial system would benefit from responsible innovation, that is, that technological advances may well represent an evolution for current systems, a win-win situation – win if you approach it the right way.

On the other hand, the official called for the regulations to be precise precisely because the damage could have a strong impact on the most vulnerable people if this fails. Therefore, all rules should focus on the activities and their risks, rather than the technologies themselves.

And the latest considerations go the way of the US benefiting from the dollar’s current role as a store of value, which is why regulators should work with industry to support responsible innovation. On the latter, he highlighted specific concerns about the crypto market such as price volatility and the presence of stablecoins.


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Source: CoinDesk, treasury

Angel Di Matteo version / DailyBitcoin

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WARNING: This is an informative article. DiarioBitcoin is a means of communication, it does not promote, endorse or recommend any investment in particular. It is worth noting that investments in crypto assets are not regulated in some countries. May not be suitable for retail investors as the full amount invested could be lost. Check the laws of your country before investing.

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