US ‘Digital Dollar’: Will It Reshape How Money Is Used Around the World?
US President Joe Biden has ordered the federal government to look into creating a digital dollar, a move with the potential to reshape how money is moved and used around the world.
Before his order results in a virtual greenback, there will be numerous major impacts — and risks — to consider first.
Here are some key questions:
What form would a digital dollar take?
It would still be a dollar issued by the US Federal Reserve central bank, like all US bills and coins used now, but in a digital form that is accessible to everyone, not just financial institutions.
Unlike money deposited in a bank account or spent via apps like Venmo and Apple Pay, it would be registered in the accounts of the Federal Reserve, not a bank.
At the same time, the digital dollar would be worth the same as its paper counterpart, a divergence from cryptocurrencies which currently have highly volatile valuations.
Key questions remain unanswered, like whether a digital dollar would be based on blockchain technology like bitcoin or if it would be linked with some sort of payment card.