Treasury Department develops digital dollar technology as Congress debates crypto regulations
The Biden administration is working to develop technology to help create a central bank digital currency (CBDC) while the political debate over how to do it continues, a Treasury secretary said Wednesday.
Nellie Liang, Treasury Secretary for Domestic Finance, provided the update as part of a speech on how the administration is advancing plans for a potential CBDC.
A CBDC will be used to issue a digital version of currency, which means in the US that the Federal Reserve will issue a digital dollar that can be used in the same way that regular dollars are used.
Federal Reserve Chairman Jerome Powell has said the central bank will not take action to create a digital dollar unless Congress directs it to do so. Lawmakers are sharply divided on the issue, making action on a CBDC unlikely this year.
Liang’s speech Wednesday indicated the department is taking steps to be prepared for such a system if lawmakers and policymakers make the decision to proceed.
“Even as policy deliberations continue, we are engaging in the technological development of a CBDC so that we would be able to move forward quickly if a CBDC was determined to be in the national interest,” Liang said during a speech at the Atlantic Council.
Liang also indicated that the administration is moving forward with deliberations. She said leaders from the Treasury Department and the Fed, along with White House offices such as the Council of Economic Advisors, the National Economic Council, the National Security Council and the Office of Science and Technology Policy, will meet to discuss a possible CBDC.
The CBDC Working Group, an interagency group created following the report released in September,” is developing an initial set of findings and recommendations to support the administration’s deliberations.
The group weighs the implications of a US CBDC, including considering how it might relate to global financial governance and help preserve the dollar on a global scale.
Another important set of goals the group considers is national security, and how the United States can create such a system of cybersecurity protections in place that protects user data.
The recommendations the group will make may relate to whether a US CBDC will help advance policy goals, such as global financial leadership and national security, as well as whether the functions of the US CBDC will be needed to do so, Liang said.
