President Biden signed an
executive order on Wednesday to explore establishing a U.S. Central Bank Digital Currency (CBDC) — also known as a "U.S. digital dollar" — akin to a cryptocurrency.
One key difference between the digital dollar and cryptocurrency is that the former would be subject to some regulation by central banks. So, for instance, the Federal Reserve could issue some monetary policy around issuance rates, address any inflation concerns and more. Senior Biden administration officials told reporters that already there are more than 100 countries that are looking into issuing their own centralized digital currencies.
Treasury Secretary Janet Yellen said in a statement that the order supports an approach that "will support responsible innovation that could result in substantial benefits for the nation, consumers, and businesses." She said that it would also address "address risks related to illicit finance, protecting consumers and investors, and preventing threats to the financial system and broader economy."
Several agencies of the federal government have already begun researching the introduction of a U.S. digital dollar, but senior Biden administration officials stressed that this is the first time the federal government has taken a "holistic" approach to assessing a the possibility of a centralized digital currency, connecting both government banking institutions with departments and agencies focused on security considerations to mitigate risk.
