A number of central banks around the world have been working on central bank digital currencies (CBDCs), but the US Federal Reserve has been a bit slow in this regard. While there hasn’t been any major digital dollar news recently, things seem to be moving forward.
Michael Greco, director of policy research at the Digital Dollar Project, recently said that it’s not about knowing “whose“but”when” the establishment of the digital dollar in the United States will take place. Greco’s comments were made during his interview with the show “First Moverfrom CoinDesk TV on Tuesday, December 27.
He said the digital dollar could emerge within the next few years, without mentioning the actual timeline. But Michael Greco said the Federal Reserve is waiting for Congress to pass legislation before it can move forward. While he doesn’t expect Congress to pass such a law next year, Michael Greco believes the conversation will move forward on Capitol Hill, especially as it relates to privacy in 2023.
Rising US inflation kept the Fed on edge and busy focusing on other key macroeconomic factors. Once things seem under control, the Fed could probably take a serious look at the digital dollar project.
Nearly 87 countries around the world have started discussions or pilot projects on CBDCs. Instead, countries such as the Bahamas and Nigeria have taken swift action to promote the use of digital currency and reduce the influence of cash in their economies.
Not to mention China, which is the main economy that has launched its digital yuan with firmness. The PBoC has developed several ways to promote the use of CBDCs for merchants and consumers.
The United States and other major economies
Although the US has been somewhat slow to develop CBDC, competing democracies are getting busy. Josh Lipsky, senior director of the Atlantic Council’s GeoEconomic Center, recently said that CBDCs are making “big leaps” in other parts of the world, such as Europe and South Korea.
In 2023, the European Central Bank is expected to move from the development phase to the pilot phase of the digital euro. This could be a big step given the size of the EU. He added that US authorities would wait to see how the ECB addresses privacy concerns with CBDCs and how they can interact effectively with existing banking systems.
Josh Lipsky also sees greater potential in a wholesale CBDC suitable for bank-to-bank transactions rather than a retail CBDC.