Rumors and, in many cases, fears have been rising regarding a United States Central Bank Digital Currency.
Some in the space have even given the theoretical token the unaffectionate name “Fedcoin.”
But is it actually happening?
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Is the U.S. government going to launch a cryptocurrency?
What Is a CBDC?
Central Bank Digital Currenciesare cryptocurrencies issued by governments.
However, a CBDC could also potentially increase less favorable abilities.
Those could include surveillance, control over individuals' finances, and other nightmare scenarios.
Does the U.S. Have a CBDC?
The U.S. does not currently have a CBDC.
It might never have a CBDC.
But, it’s exploring the option.
The order also encouraged U.S. involvement in “payment innovations and digital assets,” including exploring consumer protections.
It also set the gears in motion for a potential CBDC.
However, those reports had deadlines ranging from a few months to a year away.
A CBDC could impact most aspects of economic life.
Incremental design and development should increase the likelihood of eventually launching a successful CBDC system.
Why Would the U.S. Want a CBDC?
Issuing a CBDC could turn on the United States to offer Americans more affordable and convenient financial services.
Improved access may also help “unbanked” Americans.
The Executive Order also emphasizes a role in a CBDC spurring economic opportunity by streamlining domestic and cross-border payments.
For example, could a CBDC allow currency manipulation?
Probably not more easily than the current financial system.
Another concern is surveillance.
This potential more real concern is addressed in the extant reports.
For example, a CBDC would allow more observation than cash payments.
However, recommendations so far are that this line should not be overstepped.
This could be prevented by anonymizing accounts or at least certain transactions.
Unfortunately, this is also not the direction things seem to be going in.
“Use of the CBDC System should not be mandated.
Offline capability should be incorporated, and the role of cash should be proposed,” the OSTP proposes.
After all, not even the Executive Order that started all of this research proposed a CBDC at all.
Is the U.S. CBDC something that should be on your radar?
Is it something that you oughta be losing sleep over?
At least, not yet.
