Recently Christine Lagarde, head of the European Central Bank, announced that the European Union should soon get a digital version of the Euro. Possibly as soon as October. That would mean that the digital Euro would be a central bank digital currency (CBDC). That got me to wondering, between the White House Crypto Summit and the Strategic Bitcoin Reserve announcement, when could the US get a CBDC? Let’s get into it.
What is a CBDC?
Let’s start with what is a central bank?
A central bank is a financial institution that is responsible for overseeing the monetary system and policy of a nation or group of nations, regulating its money supply, and setting interest rates. Source: Investopedia
The Federal Reserve is the central bank for the US.
Like I stated in the intro, a central bank digital currency (CBDC) is a currency issued by a central bank. You could think of a CBDC as the official digital currency for a nation. Other entities could release digital currencies, however those would not be considered official currency.
What is the US timeline for introducing a CBDC?
The US recently canceled any action towards a CBDC. President Trump issued an executive order in January that recognized and promoted the use of digital assets. That order also described CBDCs as risky and halted “the establishment, issuance, circulation, and use of a CBDC within the jurisdiction of the United States.” Further Jerome Powell, chairman for the Federal Reserve, has stated that a CBDC will not be issued during his appointment.
The previous administration issued an executive order to initiate CBDC development and several tests were conducted with industry and academia.
So while the US will be promoting the use of a number of digital currencies, there is no current plan to implement a CBDC. Avoiding a CBDC could be safer in the short term. But as the rest of the world embraces digital currency, is the US in danger of being left behind?
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