Digital dollar is the future? Wall Street: The next "disruptive force" is it

Financial Associated Press (Shanghai, editor Huang Junzhi) News, with the rise of cryptocurrencies, Wall Street is gradually accepting a view that the next "disruptive force" will be a digital dollar, although the Federal Reserve (FED) may still need several It takes years to develop its own digital currency.

As the trend toward a cashless society becomes clearer, digital currencies are attracting greater interest, led by some countries. A digital dollar is similar in some ways to cryptocurrencies like bitcoin or ethereum, but will be different in some important areas.

However, due to the lack of regulatory and supervisory mechanisms, cryptocurrencies will lead to potential criminal activities, coupled with the high volatility of prices, they have always been feared by governments and central banks of various countries. According to reports, the White House is discussing the regulation of the hot digital currency business, and the discussions are still in the early stages.

Dalio: Digital yuan will be 'more competitive' than digital dollar: Billionaire, founder and CEO of world's largest hedge fund Bridgewater Associates, Ray Dalio says bitcoin It is expected to develop in the next few years, but the digital yuan may compete with it. In related comments, Dalio said the rise of the digital yuan would make it "more competitive" than a potential digital dollar, which U.S. officials are said to be currently studying. Provided it is accepted internationally and offers attractive interest rates, it is a very viable option for many investors. Dalio added that he expects the digital yuan could one day become one of the world's major reserve currencies. (fx168) [2021/6/2 23:03:09]

And central bank digital currencies will function more like dollars and be widely accepted, rather than tradable assets with wild price fluctuations and limited uses. It will also be fully regulated and under a central authority. While myriad issues remain to be resolved before an institution the size of the Federal Reserve steps in, digital currency trials are gaining momentum around the world.

Former Goldman Sachs CFO: Digital Dollar is Better than Bitcoin and Stablecoins: In an interview with R. Martin Chavez, Stanford professor and former Goldman Sachs chief financial officer, he analyzed some of the changes at the intersection of health and technology caused by the global pandemic of the new crown virus. For example, the world of quarantine has breathed new life into the field of telemedicine. He also explained why, while he considers Bitcoin "an amazing research project," it doesn't quite fit the bill of money in his view. Chavez compared the coronavirus pandemic to the 2008 financial crisis because they are both wake-up calls for policymakers. This pandemic is a moment to test how to build better systems, especially in health technology and industry. At the same time, it also sheds light on the potential role of a US central bank digital currency as a stimulus delivery mechanism. While Chavez advocates for a blockchain-based digital dollar, he does not believe private stablecoins are a suitable replacement. (The Block)[2020/7/9]

"Significant moves to introduce central bank digital currencies (CBDCs) could actually disrupt the financial system," Chetan Ahya, chief economist at Morgan Stanley, said in a note to clients. But efforts to introduce CBDCs are gaining momentum, with 86 % of central banks are exploring digital currencies.”

US SEC Commissioner: Digital Dollar Will Not Make Other Digital Currencies Disappear: Golden Finance reported that US Securities and Exchange Commission (SEC) Commissioner and "encryption mother" Hester Peirce said that the role of the digital dollar that may be launched is becoming more and more obvious, but she does not think This means that other types of digital currencies developed privately will disappear. If you want to create some kind of digital currency, you need to consider privacy issues, Peirce said. This is a very important issue for society because people are not comfortable with the government or anyone else monitoring their transactions. In response to a question about her term ending in June, Peirce said she could stay on until a suitable successor was found. Additionally, stablecoins raise some interesting legal issues, Peirce said. Not only must they be considered securities, but at least in the United States, how they interact with other parts of securities law must be considered. [2020/4/29]

On Monday local time, British Chancellor of the Exchequer Sunak officially announced the establishment of a special task force with the Bank of England to collaborate on the launch of the British version of the official digital currency.

News | U.S. Rep. French Hill is optimistic about the prospect of digital dollars: Golden Finance reported that U.S. Rep. French Hill said in an interview after the hearing today that our goal is to establish a payment system with a chain of custody (block chain), Open to banking and non-banking companies, offering payment alternatives. In particular, Hill is bullish on the prospect of a digital dollar that would facilitate widespread transactions. The idea of having a dollar mechanism for trading tokens for businesses or consumers is appealing, Hill said. [2020/1/31]

In fact, a 2020 survey by the Bank for International Settlements showed that nearly every central bank in the world is doing at least some work on these digital currencies. Some 60% of central banks are conducting "proof-of-concept" tests, while only 14% have actually launched pilot projects or are in development.

Along with enthusiasm for possible new prospects for the financial system came concern about how to get it right. In contrast, advocates of central bank digital currencies cite several advantages. Foremost among these reasons is to give the unbanked people access to the financial system.

Additionally, there are speed considerations. Transfer payments, such as government relief to citizens during the COVID-19 crisis, would become faster and easier if funds could be deposited directly into digital wallets.

Kristalina Georgieva, managing director of the International Monetary Fund (IMF), said recently that "the biggest beneficiaries of new forms of digital currency will be the disadvantaged, those who have been suppressed by the new crown epidemic." worst crowd."

However, once digital currency is introduced into the financial system, there will be some potential losers, including financial institutions in traditional banking and fintech fields, who may lose deposits because people deposit money in central bank accounts, and of course there are privacy issues concerns.

As the Fed and other central banks grapple with these problems, Wall Street's expectations for the future are growing. A Wall Street firm pointed out that "the race towards digital currency 2.0 has begun. Some people define it as a new space race or a digital currency cold war. In our opinion, this is not necessarily a zero-sum game, The overall digital pie still has a lot of room to grow.”

Bank of America economist Anna Zhou said in a report that issuing a digital dollar would allow the greenback to “remain highly competitive against other currencies.” The bank believes that CBDCs offer the benefits of improved currency transactions without the side effects of cryptocurrencies .

It is reported that the Federal Reserve is currently working on a project with the Massachusetts Institute of Technology (MIT) to evaluate the effectiveness of the digital dollar, although there is no specific timetable for when or whether the Fed will take action.

Federal Reserve Chairman Jerome Powell said in a recent interview that "there are many delicate and difficult policy choices and design choices that have to be made, and that's all the work we're doing. But we haven't made the decision to do so because there is a The important question is, will this benefit the people we serve? And now we need to answer that first."

In a working paper on the topic of digital currencies, Greg Baer, chief executive of industry lobby group the Bank Policy Institute, warned that the traditional banking system risks being "undercut". "The impact on growth could be significant unless the central bank also assumes responsibility for lending, or becomes a regular source of funding for banks," he wrote.

"The path forward is currently uncertain and design choices could lead to very different outcomes," Baer wrote, noting that the Fed's caution contrasted with the ECB's "hasty" action.

Morgan Stanley's Ahya pointed out, "Although central banks' CBDC initiatives are not intended to disrupt the banking system, they may have unintended and disruptive consequences. The wider the range of digital currencies accepted, the more opportunities for innovation, and the greater the potential for innovation. The greater the damage to the financial system."

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