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The U.S. policymakers believe that a digital dollar could have to preserve the primacy of their currency worldwide.
The U.S. policymakers have recently been pushing the country to adopt a digital currency that is backed by the dollar. Led by the treasury secretary, Steven Mnuchin and Arkansas Republic Senator, Tom Cotton, they have been very vocal at the U.S. senate-house regarding the digital currency matter.
Another important figure pushing for the same is the nominee for the Federal Reserve Board of Governors Judy Shelton. According to her, the U.S. needs a digital currency to assist in preserving the primacy of the dollar in the worldwide market. However, she still thinks a discussion on the matter regarding protecting the dollar preserving its stature as a reserve currency is needed urgently.
The Future of the U.S. Dollar and Digital Currency
For a long period, the U.S. dollar has held the position of the world reserve currency without being disputed, however, the emergence of cryptocurrencies is threatening that fact. Bitcoin and altcoins are taking over the role slowly by slowly in an unprecedented way.
Besides, major central banks are accumulating gold to a level that the public hardly gets hold of the larger portion. With countries like India regulating the gold business, the public is leaning on investing in crypto assets that the government hardly controls.
As the world continue suffering different threatening events like war, coronavirus outbreak, the need for a secure future investment comes in. furthermore, the interest rates in most developed countries are heading to the negative value if not zero. This will be the needed fuel for the crypto assets to take over the market in the near future.
Understanding this, the United States policymakers are really pushing in saving the dollar to retain the supremacy as the world reserve currency. The call for a digital currency backed by the dollar commonly referred to as a Central Bank Digital Currency is not out of no basis.
With a digital currency backed by the dollar, it will bolster the falling dollar in the world economy. With the public waiting for a secure digital asset that is not highly volatile as the cryptocurrencies to invest in, a dollar-backed digital currency would fill the gap.
As the Fed prepares to print money to support the economy and tackle the debt overdraft, public and investor confidence in the dollar is expected to fall. However, with a digital currency backed by the dollar, the country can control the state of the economy with much ease.
The United States is not the only country looking at a digital currency backed by the central bank as, for example, China has already developed its digital yuan. Recently a group of central banks led by that from Japan, Canada, England and also the EU bank met to discuss how to roll out a digital currency in their respective jurisdiction.