Davos 2020: WEF Calls for U.S. Digital Dollar to Tackle China’s Progress with Digital Yuan

UTC by Tolu Ajiboye · 3 min read
Davos 2020: WEF Calls for U.S. Digital Dollar to Tackle China’s Progress with Digital Yuan
Photo: World Economic Summit / Flickr

The attendees of the WEF 2020 have actively discussed the concept of a digital dollar and the necessity to match up to China with its digital yuan.

The possibility of a digital dollar is one of the topics being discussed at the World Economic Forum (WEF) in Davos, Switzerland. Attendees at the forum are discussing the utility and advantages that a digital dollar could bring.

Digital Dollar in Response to China’s Digital Yuan

One of the reasons many people are calling for a digital dollar is the digital yuan. At the moment, and as far as national digital currencies are concerned, China is blazing the trail. Chinese authorities have noted that their central bank digital currency (CBDC) is ready and testing will begin soon.

China’s progress with its digital yuan has sparked similar conversations in different countries. People are quite concerned that China will pioneer national currencies. Some have even suggested that if the U.S. does not begin to act and ultimately catch up, China could displace the U.S. in the sector.

Floating Digital Dollar

According to former Commodity Futures Trading Commission (CFTC) chairman Christopher Giancarlo, digital currencies present more utility than traditional fiats. Giancarlo said at the WEF that dollar holders are “underserved by an analogue currency in a digital world.”

The former chairman is colloquially called “Crypto Dad” because of his public support for blockchain and crypto.

Giancarlo is however not suggesting that the traditional methods available now should be disregarded. He believes what the U.S. needs is “a digital form that would be minted by the central bank.” The digital dollar would also use the current traditional banking system.

He, however, wants anonymity. Just like most of the digital assets available today, Giancarlo believes that the digital dollar should also carry that feature.

“[The digital dollar could be] set up in a way that…[the] federal government doesn’t have the ability to check if you’re shopping at Target or Selfridges.”

Is CBDC So Important?

Technology is always improving and there are many things that were important years ago, that might now be obsolete. However, it might be safe to assume that there are not a lot of disadvantages to using blockchain.

Using a central bank digital currency (CBDC) will offer a lot more efficiency and speed than is currently available with traditional methods. Cross-border transactions will also enjoy better efficiency.

PwC global crypto chief Henri Arslanian has pointed out another advantage of CBDC. According to him, CBDCs could help fight crime. Speaking to CNBC, he said:

“The potential traceability features of CBDCs could, for the first time, give us a good fighting chance against corruption and money laundering. CBDCs also could allow policymakers to measure the impact of certain policies accurately and immediately.”

Unfortunately, there is no timeline for when a digital dollar will be released. While there are still conversations about it, these discussions have not been finalized. No part of the government has begun development and so a launch might be far away.

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