US President Joe Biden has signed an executive order in which he asks government agencies to study the possible risks associated with the cryptocurrency boom and to consider the creation of a digital dollar backed by the Federal Reserve. It appears the US will also examine how cryptocurrencies can undermine US sanctions and efforts to fight climate change.
The provision urges the regulatory authorities to examine the risks to the economy, investors and consumers in a market of more than 1.7 trillion cryptocurrencies. The measure comes following the recent crisis in Ukraine, probably also to evaluate the possibility that countries subject to sanctions can circumvent them.
Treasury Secretary Janet Yellen said the agencies “assess potential risks to the financial stability of digital assets and assess whether appropriate safeguards are in place.”
According to the executive order signed by Biden, a US CBDC could have the potential to support efficient and low-cost transactions, particularly for cross-border transfers and payments of funds, and to promote greater access to the financial system, and it could also be less risky than private digital assets.
In the background, China and other countries that have already adopted a digital currency. About 16% of adult Americans have invested in this industry, used or traded digital currencies. They alone represent nearly 40 million people.
White House Economic Adviser Brian Deese told CNBC that maintaining US global leadership is a central goal of the effort, but noted that the study will also look at “unintended consequences.”
Governments and investors around the world rely on the US dollar as a safe investment, and the dollar is also critical to trade, including the global oil market.
Administration officials downplayed competition from Beijing, saying the US dollar has been and will continue to be crucial to the stability of the international monetary system as a whole, and those issued by foreign central banks “do not threaten this dominance.”
