With the U.S. government’s work on a potential digital dollar accelerating, meaning a digital greenback could soon be a reality in the U.S., the case for Bitcoin becomes “significantly stronger.”
This assessment from Nigel Green, CEO and founder of deVere Group, one of the world’s largest independent financial advisory, asset management, and fintech organizations, comes as Nellie Liang, the U.S. Treasury Department’s undersecretary for domestic finance, noted that the federal government will start meetings in the “coming months” on a Central Bank Digital Currency (CBDC).
Speaking last week in a speech for the Atlantic Council, Ms. Liang said that U.S. officials are “actively evaluating whether a CBDC is in the national interest” and highlighted some of the potential benefits of a Federal Reserve-backed digital currency, noting it “could help preserve the dollar’s global role” and possibly reduce frictions in cross-border transactions.
Nigel Green shared his thoughts with Finbold:
“This is the clearest sign yet that a digital U.S. dollar could soon become a reality, pending Congressional approval. With the world’s largest economy now ramping up efforts, the global race to CBDCs is now intensifying. It’s estimated that more than 80% of central banks around the world are considering launching a central bank digital currency or have already done so. It appears that the U.S. is now determined not to be left behind and is accelerating the project. It seems to have become a critical matter of global leadership, as China is the most economically powerful country to lead CBDC implementation.”
The pros and cons of CBDCs
Notably, proponents of CBDCs say digital payments can be processed faster than traditional cash or check payments, reducing transaction times and increasing the speed of commerce.
In addition, transaction costs could be cheaper to process than traditional cash or check payments, potentially reducing costs for businesses and consumers. A digital system could provide greater access to financial services for people who may not have access to traditional banking services. However, Mr. Green further noted:
“Whilst CBDCs might have many advantages, including convenience, efficiency, and transparency, what they do not have is privacy. In effect, the digital dollar is Big Brother-style surveillance technology. These state-backed, programmable digital currencies will provide governments with greater oversight of citizens’ transactions in real-time, potentially leading to the collection of sensitive personal information.”
According to the deVere Group CEO, this could include information about individuals’ spending habits, income, and other financial activities. He reiterates that “it’s an extra lever of control that they’ve never had before,” and this is why, as per Mr. Green, Bitcoin, and cryptocurrencies, will become increasingly attractive.
A growing number of voices in opposition
It is worth mentioning that despite the U.S. Treasury appearing to prepare for the launch of a digital dollar, there is a growing number of voices in opposition.
Representative Tom Emmer has introduced legislation in the House of Representatives that could limit the Federal Reserve from issuing a central bank digital currency. Last month, Emmer affirmed that he had introduced the “CBDC Anti-Surveillance State Act” in order to protect Americans’ right to financial privacy.
According to the lawmaker, the bill would prevent the Fed from issuing a digital dollar “directly to anyone,” bar the central bank from implementing monetary policy based on a CBDC, and require transparency for initiatives related to a digital dollar.
Nigel Green concluded:
“The U.S. joining the CBDC race more fully underscores that digital is inevitably the future of money. It’s increasingly clear that in the not-too-distant future, we will have a multi-faceted system of currencies, including fiat, CBDCs, and crypto.”
Overall, the deVere CEO labels CBDCs as “unattractive” due to privacy and government monitoring concerns and urges “sensible, informed public conversation” on the matter.
