Could US Consumers Move to Spending Digital Dollars?

March 15, 2021 James Heinsman In the News

Could the United States be on the road to phasing out the wallet-sized, iconic, rectangular dollar bill?

Probably not – at least, not entirely. But the Federal Reserve is studying the possibility of launching a digital currency that would serve as legal tender in the United States.

Of course, the US is not the only country exploring the creation of a digital currency backed by a central bank (CBDC). According to Ledger Insights, an online journal that covers the fintech sector, 70 percent of national banks around the world of banks are either exploring or actively pursuing CBDCs.

But the trend has been slow to take root: Fed Chairman Jerome Powell has advocated a slow approach to digitizing the dollar, warning last year that “it is more important to get [the digital currency] right than to be first,” and cautioning market analysts earlier this year in January that a US-backed CBDC was “years, not months” away.

Still, some lawmakers are determined to keep the issue on the Fed’s agenda. In a letter to Fed Chairman Powell and Governor Lael Brainard on March 1, Senator Sherrod Brown (D-Ohio) urged the federal government to make the issue a top priority.

The Federal Reserve must lead the way on CBDCs and other digital payments, just as the Federal Reserve has done in moving forward with its faster payments system, FedNow. The Federal Reserve’s involvement in the United States payment system is critical to our standing in the global economy, monetary policy and financial stability, and a fair and equitable financial system,” he wrote.

CBDC, currency, digital currency,

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