In a shift much supported by Congressional Republicans, US President Donald Trump effectively prohibited the creation of a central bank digital currency on Thursday.
Trump’s get had, he said, protect American from the “risks” of northern banks digital currencies, or CBDCs,” which threaten the stability of the financial system, personal protection, and the independence of the United States”.
This included the ban of” the establishment, release, flow, and use of a CBDC within the authority of the United States”, he added.
CBDCs, also known as “digital dollars,” could theoretically get issued by the Federal Reserve and been identical with real dollars, giving the US central banks control over the supply and value of the digital currency.
Former chairman Joe Biden gave the Fed instructions to look into the establishment of a CBDC, whose backers point to its possible use as a means of bringing persons without bank accounts into the US economic system as well as for tracing and tackling legal action.
But its opponents, which have long included many Republicans in Congress, have criticized CBDCs, arguing that they could threaten people’s privacy, and potentially undermine the banking system by reducing people’s incentives to bank privately.
The Fed has conducted CBDC research, but it has repeatedly stated that it does not intend to distribute one.
Fed Chair Jerome Powell stated to the US Senate Banking Committee last year,” People don’t need to worry about a central bank digital currency.” Nothing that’s even remotely close to happening any time soon.
