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Former CFTC Chairman: Federal Reserve needs to issue a digital currency to catch up with the likes of the Chinese government

Former Commodity and Futures Trading Commission Chairman J. Christopher Giancarlo said he was trying to connect private players with the government to promote the development of a central bank-issued digital currency (CBDC).

Time for the Fed to create digital currency such as the digital dollar

In an interview with Yahoo Finance in the On The Move on Thursday, Giancarlo said that the Federal Reserve needs to issue a digital currency to keep pace with the Chinese government.

A central bank digital currency can take many forms. However, in principle, physical currencies will be replaced by digital units linked to the Blockchain held in mobile wallets. Traders will have to plug into the central bank’s Blockchain when dealing directly with digital money.

Giancarlo said:

“With the popularity of online shopping, the United States should offer several digital payment options other than debit or credit cards. When we talk about a digital dollar, we are talking about the virtual world, to have the same direct payment we have in a similar human world.”

former-cftc-federal-reserve-needs-to-issue-a-digital-currency-to-catch-up-with-the-likes-of-the-chinese-government

J. Christopher Giancarlo, Former Commodities and Futures Trading Commission Chairman 

Fed Governor Lael Brainard has expressed interest in releasing something in the United States but has pointed out legal and operational issues. It is unclear whether the Fed has the right to create its digital currency, and there is still a question about the meaning of the digital dollar in the context of general use as the reserve currency.

Giancarlo’s Digital Dollar Project has partnered with Accdvisor to encourage dialogue between public and private players to at least brainstorm possible solutions. A digital dollar is a complete change in the architecture of the dollar.

Giancarlo said:

“Bitcoin and initiatives like Facebook’s Libra have their value propositions and can coexist with a currency issued by the central bank.”

Online communities have referred to Giancarlo as “Crypto Dad” since 2018. That’s when he told Congress that people’s interest in cryptocurrencies made him a witness to the “cultural” significance of the technology. He said that the US legal framework does not have any special features compared to innovations such as cryptocurrencies. He advocates updated federal laws that will clarify the position of cryptocurrencies within the context of financial regulation.

Central banks and governments around the world are also testing CBDC

A survey earlier this year from the Bank of International Settlements noted that 80% of central banks are currently doing some work on their digital currencies. About 10% of the banks said they would likely issue something in the short term. In particular, China has tested its digital yuan version.

Moreover, it seems that Japan is planning to issue digital Yen as soon as possible. As part of a consortium of six central banks, including the United Kingdom, Sweden, and the EU, Japan appears to be approaching a slow but steady approach to a state-backed digital currency.

Besides, Riksbank, Sweden’s central bank, announced the launch of a pilot project, which lasted for a year until February 2021, for the e-krona proposal. The project will use distributed ledger technology inspired by Blockchains.

Central banks almost all agree that a digital currency will make it easier for police to investigate money laundering cases. Several central banks have also noted the monetary impact of digital currencies, arguing that less money in the economy, in theory, gives policymakers more control over the money supply.

After treating Bitcoin as a commodity, the CFTC expanded its assessment of the cryptocurrency market. CFTC President Heath Tarbert told Yahoo Finance in October that the committee also considered Ether to be a commodity, adding that the future Ether could be traded on the US market soon.

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