Biden orders to study the creation of the digital dollar and risks of cryptocurrencies

US President Joe Biden has signed an executive order directing the government to assess the risks and benefits of creating a digital Federal Reserve (Fed) dollar, as well as other issues related to cryptocurrencies, the White House said.

Biden’s order will require the Treasury Department, the Commerce Department and other key agencies to prepare reports on “the money of the future” and the role that cryptocurrencies will play.

The wide-ranging investigation into the cryptocurrency market, which topped $3 trillion in November, is essential to ensuring America’s national security, financial stability and competitiveness, and staving off the growing threat of cybercrime, officials said. of the government.

Analysts see the executive order as a clear recognition of the growing importance of cryptocurrencies.

“The growth of cryptocurrencies has been explosive,” said Daleep Singh, deputy economic and national security adviser, in an interview with CNN.

He highlighted that cryptocurrencies and digital assets can affect the way people access banking, if consumers are safe and protected from the volatility and primacy of the dollar in the global economy.

The order is part of an effort to promote responsible innovation, but mitigates risk to consumers, investors and businesses, Brian Deese, director of the National Economic Council, and Jake Sullivan, White House national security adviser, said in a statement. .

“We are mindful that past financial innovation has too often failed to benefit working families, while exacerbating inequality and increasing systemic financial risk,” they said.

One of the key measures in the executive order directs the government to assess the technological infrastructure needed for a potential digital currency to be created by the Fed, an electronic version of dollar bills.

In January, the Fed raised with Congress the question of whether the United States should pursue a digital dollar, leading analysts to predict that such a project would take years.

But an administration official said the United States would move forward with developing a digital dollar, albeit with caution, given the dollar’s role as the world’s main reserve currency.

Nine countries have launched central bank digital currencies and 16 others, including China, have begun the development of digital assets, according to the Atlantic Council, leading some in Washington to worry that the dollar could lose some of its dominance to China. .

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