US Will Only Proceed with Digital Dollar Development After Broad-Based Consensus: Treasury Sec

Amidst a growing clamor amongst various monetary watchdogs on the creation of a Central Bank Digital Currency (CBDC), the United States Treasury Secretary, Janet Yellen said she has not formed any opinion on whether the US should develop a Digital Dollar yet. Speaking during a Reuters Next conference interview, Yellen noted that a potential move to develop a Digital Dollar will have to follow a broad-based consensus between the key arms of the governments including the White House, Congress, and the Federal Reserve amongst others. 

“I see both pros and cons to doing it. And my own mind is not made up about this,” Yellen said.

While the decision to create a Digital Dollar is being backed by a number of top Federal Reserve executives including Governor Lael Brainard, the Biden Administration’s pick for the U.S. central bank’s vice-chair position. According to Lael, she couldn’t imagine the US without a CBDC when other major economies including China are developing one.

On Yellen’s part, additional study of the potential benefits and risks will have to be studied in order to take a position on how to proceed.

“This is a decision that’s important and needs to command consensus. There are some benefits, but there are also meaningful costs,” Yellen said. “It can work to disintermediate the banking system. And, you know, we need to work through the pros and cons. I don’t have a view yet.”

Is the US Fighting Enough as Financial Innovation Pioneer Per its Digital Dollar Push?

Considering the number of economies that are already advancing their CBDC foothold, the United States Federal Reserve, despite its monetary policies may be unable to boast as the pioneer of financial innovation as it involves the much-acclaimed Central Bank Digital Currencies.

While different countries are working at their own unique pace, drawing on the uniqueness of their financial ecosystem, America still needs to gain traction as the US Dollar remains the fiat note of reference in global trade.

With sovereign nations like Russia also exploring avenues to swap its Dollar reserves for digital assets or their CBDCs for use beyond borders, the need to get the Digital Dollar at the forefront is now more pertinent in order not to push the global reserve currency to erode in influence.