In a recent warning, the Atlantic Council, a renowned think tank, highlights a concerning trend for the United States in the realm of central bank digital currencies (CBDCs).
As countries globally race to develop their digital currencies, the report emphasizes the potential consequences of the U.S. falling behind. CBDCs, designed for fast, secure, and cost-effective value transfer, carry implications for the stability and sovereignty of the existing monetary system.
Current Global Landscape:
While countries like China, the European Union, and India make significant strides in their CBDC projects, the U.S. has taken a cautious approach. China has been testing its digital yuan, the ECB has initiated a preparatory phase for a digital euro, and India witnesses a surge in digital rupee transactions.
U.S. Lagging Behind:
Contrary to global counterparts, the U.S. Federal Reserve has been slow to commit to a digital dollar. Concerns about risks to financial stability, privacy, and security have led to hesitations among Fed officials. Former President Donald Trump’s recent declaration against a digital dollar adds to the challenges, citing it as a threat to freedom.
Atlantic Council’s Call to Action:
The GeoEconomics Centre of the Atlantic Council urges the Fed to expedite its CBDC efforts and payment innovations, emphasizing the risk of losing leadership in the global financial system. The report urges the Fed to set standards and guide CBDC development, asserting that central bankers globally seek the U.S.’s collaboration.
Opportunity for U.S. Influence:
The report stresses that the U.S. not only lags in CBDCs but also in cross-border payments and FedNow, a real-time payment service planned for 2023. It calls for increased exploration and advancement of these projects, highlighting the unique chance for the U.S. to promote its values and interests through CBDCs.
Conclusion:
As the landscape of money rapidly evolves, the Atlantic Council’s report serves as a wakeup call, cautioning the U.S. against complacency. The urgency to engage with CBDCs, improve cross-border payments, and implement innovative services is crucial for maintaining U.S. influence in the evolving global financial scenario. The report underscores that if the U.S. does not act swiftly, the future of money may slip away.
