The slow progress of the United States in the field of CBDC has contributed to the emergence of leading positions in this regard by China, India and the EU. Analysts came to this conclusion Atlantic Council.
Over the past year, China has stepped up its work with digital yuan. ECB moved to the preparation stage for the launch of the digital euro, and in India, commercial banks began to process a million transactions per day in digital rupees, the article says.
The organization explained that the Central Bank and legislators of the G20 countries have moved from discussing the theoretical merits and problems associated with CBDC to actually testing the technology.
Unlike regulators in other countries Fed has been cautious in moving forward with pilot projects. Several senior central bank officials have expressed skepticism about the need for a CBDC.
“The position at the Fed and on Capitol Hill is that the dollar does not need innovation. This is a miscalculation.” — Atlantic Coincil emphasized.
In January, Democratic presidential candidate Donald Trump promised to prevent the creation of a digital dollar if he wins, calling CBDC a “dangerous threat to freedom.”
His recent rivals in the primaries, Ron DeSantis and Vivek Ramaswamy, expressed similar views.
On January 24, Democratic campaign participant Robert Francis Kennedy Jr. spoke out against the digital dollar.
The politician cited the example of China. According to him, in China e-CNY linked to an extensive social rating system, and the government is “capable of cutting off” access to funds in the event of “inappropriate” behavior.
— Robert F. Kennedy Jr (@RobertKennedyJr) January 24, 2024
“This [CBDC] is a disaster for human rights and civil liberties.” – he explained.
Josh Lipsky and Ananya Kumar of Atlantic Coincil's Center for Geoeconomics warned that technological innovation in payments at the Fed is lagging behind competitors. They explained that the People's Bank of China has over 300 specialists in this area, while the Federal Reserve has less than 20.
The organization noted that the Federal Reserve should use its influence and take the lead in shaping CBDC standards. The regulator is able to influence constructive developments regarding the future of national digital currencies and payments in general, economists pointed out.
They noted that the creation of cross-border systems without Washington and the dollar could complicate the use of the latter in international trade, gold and foreign exchange reserves and in enforcing sanctions.
“In the absence of more technology models and standards from the US, a fragmented system with different designs, cybersecurity parameters and messaging systems will be created. […] While many are trying to fill the innovation gap […] no one can replace the issuer of the world reserve currency,” – the experts pointed out.
The authors of the document called on the Fed to “do more to accelerate research on payment projects, including faster cross-border transfers and CBDC.”
“If they don't, the future of money could quickly pass them by,” – the experts concluded.
Let us recall that in September 2023, Congress introduced a bill banning the Federal Reserve from distributing CBDC to individuals.
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