What could be the impact of the US 'digital dollar'?

in India Speaks2 years ago

New York: US President Joe Biden has called on the federal government to look at digital currency, which is a powerful step towards reforming the way money is spent and spent in the world.

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Before his order goes into effect for the visible green return, there will be a number of major impacts - as well as risks - that need to be considered first.

What kind of digital currency can it take?


It could be a dollar issued by the US Federal Reserve central bank, like all US loans and currencies currently in use, but in a digital way that is accessible to everyone, not just financial institutions.
Unlike money deposited in a bank account or used by apps like Venmo and Apple Pay, it will be registered in Federal Reserve accounts, not a bank.

At the same time, the digital dollar will be equal to the corresponding paper, differing from the cryptocurrencies currently having highly variable rates.

Important questions remain unanswered, such as whether the digital currency will be based on blockchain technology such as bitcoin or whether it will be linked to some form of payment card.

Biden is asking organizations, including the Treasury, to look into various issues on this topic.
If the government decides to continue, it may take "several years" before we can use the digital dollar - authorities will have to consider for example what technology to use, "said Darrell Duffie, a digital finance expert at Stanford University. California.

Why set up a digital dollar?


It can reduce or eliminate even transaction costs as the transaction would no longer pass through banks, bank cards or applications that take commissions on all payments.

Proponents of her case have been working to make the actual transcript of this statement available online.
There are risks such as system failure or cyberattacks, and there are also questions about privacy, as the government cannot access everything that is being done.

The banking system may also look down on banks as banks currently use customers' loans, and with a digital dollar, they may have less money to spend.

How will the world's finances be affected?


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Foreign transfers, often slow and expensive to make, can be very disclosed.
Work currently under two days of verification can be done in one hour, said Marc Chandler, a foreign trade expert at trader Bannockburn.

For Chandler, the geopolitical role of the American dollar will not be offended by the introduction of the digital version.
The digital dollar will represent "evolution rather than evolution", he noted, recalling that more than $ 6.5 billion has already been exchanged on a daily electronic form in the foreign exchange market.

Even though China introduced a large digital yuan, as discussed, he said he did not think it would change China's role in the global economy as "there will always be questions of trust, transparency, market depth."

For Stanford's Duflie, however, if the United States wants to continue to benefit from the dollar system as a dominant currency in central bank deposits and international payments, it is important for the government to tread carefully.
"The United States will have to ensure that it remains at the forefront of international forums that address the standards for making digital payments in digital currencies," he said.

Can the United States have access to it?


Some countries are already working on digital currency exchanges, from the eurozone to India, but "there is no evidence to suggest that being the first to sell offers any significant or tangible benefits," said Jamiel Sheikh, founder of the CBDC Think Tank.

Conversely, failure due to unintended consequences, overuse, or other issues can undermine faith in the institution we have issued, he noted.

Can the crypto world be turned upside down?


Properly designed, a digital dollar can be preferred for home use rather than cryptocurrency, Duflie said.
Regarding transfers, he said, "he doubts that major banks such as the Fed or the ECB, China or Japan, will offer central bank accounts to people around the world."

If the United States did so, it noted, it could undermine the financial system of small countries whose citizens would rather use digital currency than local currency.

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