Is the US Digital Dollar… dead? ????
The Federal Reserve thinks so.?
Welcome to our 20,000 subscribers!?
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Will the US ever have its own digital currency? It’s not looking likely right now.?
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Read on to find out why.?
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What you need to know right now:?
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Ah, the US digital dollar. A utopian dream for some, a dystopian nightmare for others.?
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For those not familiar with the project’s history, here’s a quick primer:?
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In 2022, US President Joe Biden issued an executive order demanding a report on the risks and benefits of creating a digital US dollar.?
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The digital dollar would fall into a class of digital currencies known as Central Bank Digital Currencies, or CBDCs.?
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CBDCs are a bit like cryptocurrencies - except they are issued and controlled by a country’s central bank.?
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If cryptocurrency is all about free-wheeling decentralization and zero government oversight, CBDCs are the opposite of that. It’s very much digital currency controlled by “The Man” - and that’s why it’s so controversial.?
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A digital dollar would be legal tender in the US, allowing people to buy goods and services online.?
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Fans of the digital dollar argue that it would make banking cheaper, faster, and more accessible for Americans - potentially bringing millions of “unbanked” Americans into the financial system for the first time.?
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Critics, however, argue that a digital dollar would allow the Federal Reserve (and therefore US government) to monitor the financial transactions of American citizens, raising concerns about privacy and executive power.?
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So it’s no surprise that in a fiery election year, the project has been quietly put on ice.?
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“We're nowhere near recommending – or let alone adopting – a central bank digital currency in any form," said Jerome Powell, Chairman of the US Federal Reserve.?
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"People don't need to worry about it," he added.?
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Well, that’s that settled, then… ???
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Our take? CBDCs are an idea with plenty of potential. Deployed correctly and with appropriate safeguards in place, they could help to stabilize national currencies and facilitate domestic and international trade.?
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They would also make it faster, cheaper, and easier for businesses to pay salaries to workers and taxes to governments.?
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But it feels safe to say that the US of 2024 isn’t the right market for this kind of experiment. Meanwhile, we’ll be keeping a close eye on the performance of existing CBDCs in countries like India .?
What else is there to read right now??
This week, in a divergence from our usual customs, we’ll share with you a link directly from the Papaya Global blog – where we recently revisited the G20 endorsed roadmap to enhance cross-border payments. The roadmap – developed by the Financial Stability Board (FSB) in coordination with the Bank for International Settlement’s Committee on Payments and Market Infrastructures (CPMI) - highlighted the need to make cross-border payments cheaper, faster, and more transparent.?
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We went back to the roadmap to see how the world is doing when it comes to meeting the plan’s KPIs for “retail payments” (defined as “high-volume, relatively low-value transactions made by individuals and businesses”).?
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The verdict? Well, if we call it “work in progess” some might say we’re optimistic. Which we do not take shame in being!?
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The three aspects we examined are:?
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We looked at the original target, the current situation, and put things into context, especially through the angle of making cross-border workforce payments. It’s a an insightful read summarizing a lengthy report, and we think you’ll find it useful. Find it here .?
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Ah, the US Digital Dollar ???
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A utopian dream for some, a dystopian nightmare for others.?
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Wondering what the Digital Dollar is, and why it’s so controversial??
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Learn all about it in the latest edition of Fintech for CFOs, Papaya Global’s #fintech news briefing for CFOs, payroll pros and fintech enthusiasts ???
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#payroll #payments #cryptocurrency?