US Urged to Catch Up in CBDC Race

The United States is slowly developing central bank digital currencies, which risks the country falling behind China, India, and the European Union in determining the future of money, according to a warning from the think tank The Atlantic Council.

Global Advances in Digital Currencies

China has increased work on its digital yuan over the past year. The European Central Bank is now preparing to launch a digital euro. In India, banks process a million daily transactions for the digital rupee.

However, the Federal Reserve has been cautious about testing digital currencies in the US. Several Fed governors have questioned whether a central bank digital currency is needed. In the current month, Donald Trump declared his intention to halt the development of a digital dollar should he emerge victorious in the election. He characterized it as a “menace to freedom.”

JUST IN: 🇺🇸 Donald Trump says he'll "never allow the creation of a central bank digital currency where they can rob your money." pic.twitter.com/D7nn3YLO1j

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Josh Lipsky and Ananya Kumar wrote the Atlantic Council report. They say the Fed is behind other central banks in payment innovation. For example, They observe that the People’s Bank of China employs more than 300 staff dedicated to digital currencies, while the Fed, in contrast, has a maximum of 20.

The Council says the Fed should set standards for central bank digital currencies. This would let the Fed shape how digital currencies develop. Central bankers worldwide are asking the Fed for help on this. With US leadership, digital currencies may be fast, cheap, and safe. Money could be more fragmented and less secure, warn Lipsky and Kumar.

They say US delays apply beyond digital money. For example, progress could be faster in improving cross-border payments. And only some banks have adopted the Fed’s FedNow system.

Lipsky and Kumar say Fed officials should speed up work on payments projects before January 2024. This includes cross-border transfers and digital coins. If not, they warn the future of money may pass the US by quickly.

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