U.S. Government-backed Digital Currencies

Paying for things in the United States is about to get a lot easier. Worldwide digital currency could be on the horizon with the new implications put in place by many countries in the last decade. Countries and powerful organizations like China, Sweden, the European Union and many others have fully begun the implementation of Central Bank Digital Currency (CBDC). With the amount of potential CBDC has, the Biden administration has put a lot of support behind the research and development of a U.S. CBDC.

CBDC preexisting in other countries

China is among the top three countries with the most success with CBDC. China released digital yuan on January 4, 2022 and is further along with its development than most countries. The digital currency works through an app called e-CNY, which is available in both Android and Apple app stores; this app is still in its development phase. However, digital yuan was used to purchase securities for the first time in January of 2023. The country also added a new function to e-CNY that allows users to make offline transactions. These are huge steps for the further development of digital currency and will set the stage for many countries looking to implement a CBDC.

Will the U.S. take steps toward government-backed digital currency and why?

The Biden administration is supporting the research and development of a CBDC. He said in a recent interview, “We know the implications of potentially issuing a digital dollar are profound. They’re extraordinarily wide-ranging.” With that being said, a United States government-backed digital currency is in the works and it’ll likely be around another year before any real money is settled on a U.S. CBDC. The implementations of digital currency won't change much in regards to everyday experiences or transactions, however, it could fully revolutionize banking as well as government sanctions, banking accessibility and taxes.

A U.S. CBDC and its objectives

Although the U.S. CBDC hasn’t fully been launched yet, the White House released a document containing information about its objectives. “These objectives flesh out the goals outlined for a CBDC in Executive Order…ensuring responsible development of digital assets.” If implemented, this system will consist of eight objectives being as follows, it should protect consumers, promote economic growth, improve payment systems, provide interoperability with other platforms, advance financial inclusion, protect national security, respect human rights, and align with democratic values. The White House also mentions that posting its potential CBDC objectives does not mean that they are taking a position on whether or not this policy should be implemented. But, with these objectives, it is clear that the federal government is ready for something more modern and new in regards to digital banking, security and the American way of life.