White House: Biden will order the start of work on creating a digital US dollar

US President Joe Biden will order on Wednesday government agencies to begin work on creating a digital US dollar, White House officials said.

“The implications of the prospect of issuing a digital dollar are profound,” one of the officials told reporters, stressing the crucial role of the US currency in the global economy.

“We must be very cognizant about this analysis because the implications of our move in this direction are profound for the country that issues the world’s primary reserve currency,” he added.

The official noted that the United States “can move quickly, but we can also move in a smart and comprehensive way.”

According to a White House statement, the United States will study the potential benefits and risks of creating a digital dollar, with “pressure research and development on potential common digital currencies in the United States,” amid the massive rise in private cryptocurrencies such as Bitcoin.

The White House said about 16 percent of American adults, about 40 million people, have invested in, traded or used cryptocurrency.

The White House said about 16 percent of American adults, about 40 million people, have invested in, traded or used cryptocurrency.

Another official stressed the need to ensure that all Americans benefit, because “previous forms of financial innovation eventually hurt American families while making a small group of people extremely wealthy.”

The US Federal Reserve released a report in January indicating that digital currencies could offer potential benefits to US consumers and businesses, but said it was not clear that they would outweigh the potential risks.

Under Biden’s order, US government agencies will consider preventing money laundering as well as efforts to use digital currencies to evade financial sanctions.

The world’s largest economy will join more than 100 countries that are exploring or launching pilot programs with their central bank digital currency (CBDC), including the Chinese digital yuan.

Biden’s executive order is expected to call on agencies, including the Treasury Department, to examine issues including consumer protection, financial inclusion and the use of digital assets for illicit activities.

Officials downplayed competition from Beijing, saying that the dollar “was and will be critical to the stability of the international monetary system as a whole”, and that those issued by foreign central banks “do not threaten this dominance.”

The global rise of cryptocurrencies and the increasing use of digital payments has boosted interest in formal digital money, and major central banks around the world are exploring this possibility, with Nigeria in October launching its own virtual currency, while El Salvador has allowed bitcoin to serve as legal tender.

Digital assets, including cryptocurrencies, have witnessed tremendous growth in recent years, as the market value exceeded $3 trillion last November, compared to just $14 billion five years ago.