Digital Dollar Project encourages the U.S. to take a more active role in developing global CBDC regulations
(Kitco News) - The Digital Dollar Project, which is a partnership between Accenture and the Digital Dollar Foundation intended to advance the exploration of a U.S. central bank digital currency (CBDC), has released an updated version of its white paper which encourages the U.S. government to take a more active role in setting international standards for digital currencies.
“The United States must ensure that the democratic values of a free society, including financial privacy and economic freedom, are enshrined in the future of money,” the DDP said.
The paper alleged that the U.S. had been “conspicuously absent” from global CBDC discussions until 2022, which the DDP called an “unsustainable position” due to the fact that the issuance of CBDCs by other nations “will significantly impact the domestic U.S. economy.”
As more countries develop and release CBDC systems designed to replace traditional payment rails, the threat these systems pose to the dollar’s role as the global reserve currency will only continue to increase, the DDP said. Due to this, “U.S. policymakers should develop a strategy to preserve the dollar’s central role in the global digital economy.”
Data provided by the Atlantic Council shows that the government of 114 countries, representing over 95 percent of global GDP, are currently researching or developing a CBDC, while the U.S. remains cautious in its approach to creating a digital dollar.
“In the coming CBDC future, the United States should actively lead global discussions on governance, interoperability, security, privacy, and scalability standards, rather than reacting to foreign CBDC decisions,” the DDP recommended. This should be done “independent of a decision to deploy a U.S. CBDC or not,” it added.
The DDP offered three suggestions to the U.S. government and U.S. private sector when it comes to dealing with CBDCs moving forward.
First, the U.S. government should “increase investment and activity in researching and exploring the benefits and challenges of a tokenized digital dollar, including leveraging transparent and innovative public-private partnerships to reimagine the potential “rails” of such a system and evaluate solutions to preserve all forms of privacy while balancing security needs.”
Second, it recommended that the government establish itself as a global leader in setting international digital currency standards “regardless of whether it decided to deploy a digital dollar.”
And finally, the DDP recommended that the U.S. private sector – which includes U.S. commercial entities operating in foreign jurisdictions and policy-based academic and non-profit institutions – educate itself to “understand and consider the strategic and operational impacts of rapidly progressing CBDC deployments abroad.”
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Above all, the DDP called on the U.S. to take charge in helping to establish a global framework for CBDCs so that American ideals can be included in the design.
“The United States should lead the development of an international regulatory framework around digital currencies, including CBDCs, that prioritizes privacy, consumer protection, financial anti-crime compliance, financial stability, and the protection of monetary sovereignty,” the DDP concluded.