21 Jul, 2022, 13:00 ET
WASHINGTON, July 21, 2022 /PRNewswire/ -- As policymakers continue to explore a potential digital dollar, efforts to address key questions posed in President Biden's recent Executive Order regarding the feasibility of a Central Bank Digital Currency (CBDC) in the United States are well underway.
Core to its mission, The Digital Dollar Project (DDP) convenes leading experts and diverse viewpoints from across the private and public sector to experiment, explore, collect and share information and data that empower informed decision- and policy-making.
In recent remarks this summer, Federal Reserve Board Chairman Jerome Powell and Vice Chair Lael Brainard each reiterated the Federal Reserve's close attention and analysis of the viability of a U.S. digital dollar, echoing DDP's core positions around research, testing and regulatory frameworks that encourage innovation, financial inclusion and promote American values.
In July, DDP responded to guiding questions from the Department of Commerce on the competitiveness of digital asset technologies, highlighting the unique role that the U.S. can play in shaping central bank digital currencies through private-public innovation. This follows DDP's May response to the Federal Reserve Board's research and analysis comment request.
In both responses, DDP homed in on seven key points:
- It is critical that the U.S. pursue robust pilot programs and testing under real-world conditions to generate necessary empirical data;
- Interoperability with existing and future payments models is key to enhancing choice and optionality;
- A CBDC is not antithetical to further private sector innovation and there are many lessons to be gleaned from private sector innovation today;
- Embedding comprehensive privacy protections that meet U.S. Constitutional and due process requirements and expectations of a democratic society will be a key competitive advantage;
- Distribution of a CBDC should be through banks and regulated FinTechs, with the latter group offering important potential financial access and inclusion benefits;
- Pursuing a U.S. CBDC should be a public/private collaboration that leverages the best deployable technology;
- Tokenizing the U.S. dollar is an opportunity to enhance our currency's technological infrastructure as a means of future-proofing its role in the global economy
"We are building a policy framework to help regulators, policymakers, business leaders and technologists translate big-idea innovation into actionable and pragmatic solutions," said Jennifer Lassiter, executive director of The Digital Dollar Project. "It is encouraging to see so many of DDP's core principles, as outlined in The Digital Dollar Project CBDC White Paper, reflected in Chairman Powell's and Vice Chair Brainard's recent comments. This underscores the transformative potential of central bank digital currencies to not only meet economic needs, but also the potential to enshrine our democratic values and secure competitive advantage."
DDP plans to submit additional responses, further sharing positions on CBDC's potential impact on competitiveness, regulatory frameworks, talent retention, trade agreements, national security, risk mitigation and interoperability. In August, DDP will provide response to the Department of the Treasury related to their Ensuring Responsible Development of Digital Assets request for comment.
About The Digital Dollar Project (DDP)
A nonprofit organization, The Digital Dollar Project was created to encourage research and public discussion on the potential advantages and challenges of a U.S. CBDC — or a "digital dollar." The DDP will identify options for a CBDC solution to help enhance monetary policy effectiveness and financial stability; provide needed scalability, security and privacy in retail, wholesale and international payments; and integrate with existing financial infrastructures, including U.S. Federal Reserve-related projects. Visit digitaldollarproject.org.
SOURCE The Digital Dollar Project
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