Janet Yellen, the US Treasury Secretary, has expressed her views on the possibilities of a digital dollar, although she is cautious to draw any conclusions at this time.
Yellen said on Thursday that she had not developed an opinion on whether the Federal Reserve should construct a digital version of the dollar, but that such a step would require wide congressional, central bank, and White House support.
This comes after news that the Federal Reserve is investigating whether or not an electronic version of the greenback would be advantageous. The digital dollar, according to Yellen, has both advantages and disadvantages. Although she has ideas for implementation, she believes that additional study is needed before any definitive solutions can be given.
According to Yellen, the benefits of a central bank digital currency, especially its implications on banking institutions, need to be studied further.
President Biden’s choice for vice-chair of the US central bank, Federal Reserve Governor Lael Brainard, has urged for a digital currency to be established as soon as possible. She said she couldn’t imagine not having one at a time when China and other countries are working on their own central bank digital currencies, which she sees as a race to the top.
Before moving further, according to the Fed secretary, there must be agreement. Yellen stated that the Federal Reserve is working on a study on the subject and that it would be released shortly, adding that they are aware that wide consensus among authorities is required before they can proceed.
“This is a critical decision that requires unanimous agreement. There are certain advantages, but there are also significant disadvantages.”
Despite the fact that some central banks have created their own CBDCs, Powell stated that the Fed is not rushing to join the trend.