When you hear about a dollar, you usually think of the standard picture of a bill with a face of an important person in American history. These bills are then kept in the wallet and transferred via hand to another person during payments. But what if this could be done much more simply and securely? Instead of payments taking place offline and money supplies being kept at home or banks, the payments are taking place online and money supplies can be stored online.
As the world is digitalizing at a rapid rate and more transactions are taking place online has resulted in the growing push of lawmakers in the USA to create a digital dollar by the US Treasury (Mearian, 2022). This idea is based on the benefits of a digital currency, such as the elimination of funds transfer waiting periods, fees, and the movement of money across borders by those without bank accounts (Mearian, 2022a).
The electronic dollar is a virtual representation of the US dollar and is therefore different compared to the current cryptocurrency that are around. This E-dollar, as it is named, is coin that is backed by the Federal Reserve Bank and has always the same worth as a real dollar. Which would be safer compared to the current digital currencies. Currently the US is exploring the possibilities of a Central Bank Digital Currency (CDBC) and is planning to set up a pilot program for this digital dollar.
According to the vice chair of Consumer Protection and Financial institutions it is expected that a CDBC would increase inclusion for “Black, brown and low-income communities” to build and sustain wealth (Mearian, 2022). The digital dollar has several benefits, however with these benefits also controversies arise such as that the online currency has an impact on the privacy of the US citizens. People think that the government may use the currency in its benefit to track everyone with their transactions. As beneficial as the currency sounds, it sure does have its drawbacks and therefore the fed should consider in what way they will use the information they gain from the digital cash. Whether they use this in a good or bad way will eventually have a big impact on its success.
References
Mearian, L. (2022, October 13). Would a US digital dollar let the government track you? Computerworld. Retrieved October 17, 2022, from https://www.computerworld.com/article/3676591/would-a-us-digital-dollar-let-the-government-track-you.html
Mearian, L. (2022a, March 31). Lawmakers join growing push to create a “digital dollar.” Computerworld. Retrieved October 17, 2022, from https://www.computerworld.com/article/3655728/lawmakers-join-growing-push-to-create-a-digital-dollar.html
