The United States may have conceded a head start to other nations in “setting global standards for the future of money” regarding central bank digital currencies (CBDC), but in the future the country “should lead the development of an international regulatory framework around digital currencies,” the Digital Dollar Project (DDP) said on Wednesday.
In its updated white paper, the DDP, a nonprofit organization advocating for a U.S. CBDC, said the U.S. should set that regulatory framework “independent of a decision to deploy a U.S. CBDC.”
More than 100 jurisdictions around the world are researching or developing a CBDC but the U.S. remains cautious on the merits of a CBDC.
“In the coming CBDC future, the U.S. should actively lead global discussions on governance, interoperability, security, privacy and scalability standards rather than reacting to foreign CBDC decisions,” the DDP wrote.
The DPP laid out a series of warnings about the United States’ cautious approach, calling it “a conspicuous absence” and an “unsustainable position.”
Such a “defensive posture” by the U.S. threatens to impact its domestic economy if foreign nations issue their own CBDCs that become widely adopted as the de facto standards for international wholesale and retail payments, the paper warned.
Additionally, the CBDCs of other nations could be used to avoid financial sanctions making it imperative that the U.S. find ways to maintain the dominant use of the dollar in the digital global payment systems.
If the United States-led global financial infrastructure is perceived as “too slow and expensive in comparison to foreign alternatives,” a potential threat as other countries rapidly explore their version of central bank digital currencies, it’s possible other nations will begin or continue the process of “de-dollarization,” the DDP argued.