President Joe Biden yesterday issued an executive order that could lead to the US creating a digital currency.
“My Administration places the highest urgency on research and development efforts into the potential design and deployment options of a United States CBDC [Central Bank Digital Currency],” the executive order said. “These efforts should include assessments of possible benefits and risks for consumers, investors, and businesses; financial stability and systemic risk; payment systems; national security; the ability to exercise human rights; financial inclusion and equity; and the actions required to launch a United States CBDC if doing so is deemed to be in the national interest.”
Biden’s order said a US-issued digital currency could be used to “support efficient and low-cost transactions, particularly for cross‑border funds transfers and payments, and to foster greater access to the financial system, with fewer of the risks posed by private sector-administered digital assets” such as bitcoin and other cryptocurrencies. But there are “potential risks and downsides to consider,” and Biden ordered federal agencies to prepare a report within six months analyzing the implications. Over 100 countries are already “exploring or piloting” CBDCs, the White House said.
Biden also ordered government agencies to develop policies for managing cryptocurrencies that already exist. “The rise in digital assets creates an opportunity to reinforce American leadership in the global financial system and at the technological frontier, but also has substantial implications for consumer protection, financial stability, national security, and climate risk,” the White House said. Biden’s order “encourages regulators to ensure sufficient oversight and safeguard against any systemic financial risks posed by digital assets.”
Biden’s order noted that “negative climate impacts and environmental pollution … may result from some cryptocurrency mining.” There would be no need for mining with a digital currency issued by a central bank.
Bitcoin’s price was up 8 percent Wednesday, and other cryptocurrencies rose as Biden’s order “appeared to take a supportive stance toward the industry,” CNBC wrote. Bitcoin’s price has been highly volatile, as it “began the pandemic at $7,300, peaked at around $68,000 before falling back down to about $39,000,” a Biden administration official noted in a call with reporters on Tuesday.