The question of whether the U.S. needs a digital dollar moved far higher up the political agenda this week, as the need for a central bank digital currency (CBDC) played a leading role in President Joe Biden’s eagerly awaited executive order on regulating cryptocurrencies.
While the order, issued on Wednesday (March 9), did not make any decisions on the matter, it did make the CBDC question a priority within the broader crypto debate. Discussing the issue before ones like protecting consumers, financial stability, cybercrime and money laundering, it said that the administration “places the highest urgency on research and development efforts into the potential design and deployment options of a United States CBDC.”
See also: White House Crypto Executive Order Ignites Digital Dollar Debate
The directive is far more attention than it’s gotten from other officials, with Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen still undecided on the issue, and Powell making clear that there was no hurry even if the digital dollar is greenlighted.
Key focus points included protecting the international standing and influence of the U.S. dollar as the world’s reserve currency, protecting privacy while providing interoperability with other CBDCs and not falling behind China, which is on the verge of taking a digital yuan live.
That last one has been on legislators’ minds a lot lately, most recently when nine Republican senators introduced the Say No to the Silk Road Act, which would require a report on the digital yuan’s impact on the U.S. and limiting its use by the government, crypto industry news source The Block noted.
Biden’s executive order called for a separate report looking at a CBDC’s place in “the future of money and payment systems,” which will focus on modernization of the payments system as well as economic growth, financial inclusion and national security.
And it placed a timeline on the process. While all topics covered under the executive order required a multi-agency report within six months, the digital dollar section added something unique — a draft bill covering the legal changes needed to create a CBDC should the U.S. decide to launch one. That was due another 30 days later.
Digital Rupee Coming Soon
India may have relented on an outright crypto ban, but it’s still very clear that it won’t permit cryptocurrencies for payments. Its CBDC plans, on the other hand, are progressing rapidly.
Speaking at the India Global Forum this week, Finance Minister Nirmala Sitharaman announced that the digital rupee will be launched this year, The Street reported.
Read more: Crypto Coming to India with Digital Rupee, 30% Tax
“It was a conscious call taken in consultation with the central bank — the Reserve Bank of India (RBI),” Sitharaman said. “We would like them to design it the way they would like to do it, but this year we expect the currency to come out from the central bank itself.”
When India’s digital rupee joins the digital yuan, more than one-third of the world’s population will have access to a CBDC.
Jamaica to Airdrop Jam-Dex CBDC
The Bank of Jamaica will give the first 100,000 citizens to use its new CBDC, Jam-Dex, a crypto-style thank you, “airdropping” about $16 into their digital wallets to reward early adopters and encourage its use, Cointelegraph reported.
More here: ‘No Cash, No Problem!’ Jamaica Christens Its CBDC Jam-Dex
The central bank completed its final trial at the end of last year, and is expected to roll out its Jamaica Digital Exchange currency in April.
Brazil Chooses Partners
Brazil, which last year pushed its CBDC launch date back from this year to 2024 or 2025, has selected nine partners to assist the Central Bank of Brazil’s LIFT innovation lab in creating its CBDC, local news outlet NDTV reported.
Surprisingly, this included the decentralized finance lending platform Aave; one of the major points of DeFi is working outside national governments. Other partners include Brazilian cryptocurrency exchange Mercado Bitcoin, banks Santander Brasil and Itau Unibanco, German payments provider Giesecke + Devrient and several others.
Israel, Uganda Study CBDCs
The Bank of Israel and Bank of Uganda have both reportedly begun CBDC studies. In a paper published last week, Israel’s said that the impact of a digital shekel on the financial stability of the country’s banks should be minimal.
Related: Digital Shekel Won’t Disrupt Israel, Central Bank Says
Israel has not yet decided whether to launch a CBDC.
The Bank of Uganda has begun a feasibility study, and is planning to revise the country’s financial laws to allow a CBDC, Bitcoin.com reported.
The bank’s executive director for operations, Charles Abuka, noted recently that the bank has not yet determined if there is a need for a digital currency.
Singapore Uninterested
Singapore’s minister of finance Lawrence Wong told legislators last week that there’s “no pressing need for [the] issuance” of a CBDC, according to Ledger Insights.
That said, Wong, who is also deputy chairman of the Monetary Authority of Singapore, said that the government wants to be ready to issue a CBDC if and when it is deemed necessary. To that end, it has created a public-private partnership to build out the technical infrastructure for a CBDC.
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