Treasury Official: No Hurry for US to Adopt Digital Dollar

A leading U.S. Treasury official says the digital dollar could still be years away.

U.S. regulators must first determine whether a central bank digital currency (CBDC) would truly improve real-time interbank payments in terms of speed and cost, Nellie Liang, undersecretary for domestic finance at the Treasury, said in a Bloomberg News interview Wednesday (Dec. 21).

Liang also noted that the Federal Reserve is hoping to introduce real-time interbank payments next year. She was also firm when asked if a CBDC would help the dollar keep its status on the international scale.

“My view is our global leadership doesn’t come from our technology,” she said. “It comes from our governance system, the rules that govern our financial markets, our rule of law, and the safety and soundness of our institutions.”

Liang stressed that studying a potential CBDC was to prepare for a need that didn’t yet exist.

She told Bloomberg that if after five years pass and many other countries have introduced a CBDC, that might help push the U.S. to embrace the digital dollar.

Other countries are getting closer to adopting their own digital currencies. Last week saw the head of Brazil’s central bank announce plans to launch a digital currency next year.

Central Bank of Brazil President Roberto Campos Neto says the country’s CBDC will debut after a closed pilot with financial institutions (FIs), and that the design of the CBDC would lead banks to tokenize their assets and promote more efficiency.

“If the digital currency is actually a tokenized deposit, it inherits all the regulation that already applies to deposits,” he said.

The Atlantic Council found that most of the world’s central banks have shown an interest in looking into CBDCs: 11 countries have already fully launched a CBDC and 17 others are currently in some stage of trialing one. In all, 72 nations are reported to be in the research and development phase, while only two nations, Senegal and Ecuador, have called off their efforts.

And as PYMNTS noted earlier this week, these projects haven’t always been met with enthusiasm. For example, the Bank of England’s digital pound project hasn’t gotten much support from the British parliament.

And India’s wholesale digital rupee project has bankers in that country pointing out a downside to the program: Each trade involving the CBDC must be settled individually, while transactions that use the existing interbank network can be handled in bulk.