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The Federal Reserve is a long way from issuing its CBDC, must get clear approval from Congress and the executive arm of government.
The top executive of the United States Treasury Department Nellie Liang has said that the federal government is under no pressure to launch its central bank-issued digital currency (CBDC) – the “digital dollar.” Liang, who is the undersecretary for domestic finance at the Treasury, disclosed this during a Bloomberg interview on Wednesday.
According to her, the country’s regulators first need to determine if the digital dollar will, in any way, help to achieve fast and low-cost, real-time interbank payments. Interestingly, the Federal Reserve is already keen on introducing real-time interbank payments in the coming year.
Furthermore, Liang hinted that the US adopting a CBDC could still be several years away. Maybe up to about five or more years. She believes that within this timeframe, many other countries should have introduced their CBDCs, and that might spur the U.S. to adopt one too.
Overall, she insists that the US government will carefully understudy the CBDC in order to prepare itself for a need that currently doesn’t exist.
Does Delaying the Adoption of Digital Dollar Threaten the US Dollar’s International Status?
It might be worth mentioning that while the US still struggles with coming up with its digital currency, China has so far piloted the digital yuan in at least 15 provinces. Even more, it has also piloted the digital yuan across a multinational financial network.
For some financial experts, China is well on course to set the standards, as far as digital cash is concerned. Essentially, this means that the dollar’s place as the world’s reserve currency might currently be under threat.
Meanwhile, Nellie Liang also had a thing to say about the potential of a digital dollar defending the dollar as a reserve currency. She said that the place of the US dollar as a global leader does not come from a specific technology. She said:
“It comes from our governance system, the rules that govern our financial markets, our rule of law and the safety and soundness of our institutions.”
Without a doubt, the US government is in no hurry to issue a CBDC. But when it is finally ready, the Fed would do so in collaboration with Congress and the executive branch.