As the head of the US Federal Reserve System Jerome Powell noted, now the issue of issuing the digital dollar requires close attention.
Given the dominant role of the US currency among the world’s reserve currencies, the US was not overly concerned with the introduction of the digital dollar, but Powell said it should be “a top priority,” writes the Global Times.
Powell isn’t the only senior U.S. official to back the digital dollar.
At the virtual conference, US Treasury Secretary Janet Yellen also expressed interest in supporting research on the issuance of sovereign digital currencies, which she said “could lead to faster, safer and cheaper payments.”
She stressed that, thanks to notable advances in electronic financial technology, 5G networks, smartphones and e-commerce, the world’s major economies are increasingly aware of the trend towards digital currencies, which will become an important part of the future monetary system.
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However, compared to other countries, the dollar’s hegemony has made it unnecessary for the US government to pioneer digital financial system innovation.
Digital payments and related applications in the United States are not growing as fast as in China, for example, which may have something to do with the national conditions of the first state, such as the dominant role of credit cards in settlements.
Despite some market concerns that the issuance of digital currencies by central banks could lead to a new round of competition or rivalry between cryptocurrencies, the creation of a potential digital US dollar remains important.
Against this backdrop, the digital US dollar could contribute to a social shift towards faster and easier payments – a trend that could help link e-commerce markets across countries, which would also help to regulate international trade transactions.
However, American experts point out that the US needs extra caution when it comes to issuing a digital dollar. If a government-backed digital currency brings unnecessary risks to the market, the dollar could suffer.
Therefore, Powell, given that the dollar is the world’s reserve currency, considers it necessary and responsible to do it right.
How are others doing?
Today, China is the world leader in the development of a digital national currency.
The digital yuan, for example, is now being tested in many cities across the country.
At the same time, countries such as the UK, Canada, Japan, Switzerland, and the European Union are also actively studying the viability of their digital currencies.
In this context, central banks around the world especially need to deal with digital currencies, which will not only be an integral part of the monetary system in the era of the mobile Internet, but will also help reduce financial risks.
What is the relationship to cryptocurrency?
Meanwhile, it is becoming increasingly clear that blockchain-backed cryptocurrencies, in particular bitcoin, are still considered speculative assets that lack stability for widespread use.
Until now, Bitcoin and other similar unofficial digital currencies have already caused problems and concerns in financial markets, and many economists have warned investors about the risks.
So, on February 11, 2021, the American economist Nouriel Roubini, who predicted the 2008 crisis, warned investors against buying bitcoin following the example of Elon Musk and predicted a new collapse for the cryptocurrency.
According to Dmitry Lavrov, trader and founder of Tradunity, in the near future, cryptocurrency quotes may drop to $ 42-40 thousand. This zone will act as a support, after which the trend will reverse and the asset will return to growth.
“If fundamental factors help the bears break this support zone, then we will see $ 30,000,” Lavrov warned.
If his forecast comes true, then the value of the cryptocurrency will fall by another 35% from the current levels.
Trader Josh Rager recommended keeping an eye on the $ 44 thousand mark. On February 23, the value of the cryptocurrency dropped to this level, after which it rose.
Rager is sure that if this time this mark fails, the rate will continue to move towards $ 40,000.
“If the price drops to $ 40 thousand, then in the medium term it may reach $ 30 thousand. After that, it may rebound,” the trader said.