With coronavirus shutting the world economy down, the rush for the first digital fiat has only sped up.
And with governments looking towards printing their way out of trouble again, and in the US all taxpayers looking to receive UBI, the rush for a digital dollar is really gaining pace. But it's not just a digital dollar that's being negotiated, a tokenized dollar is looking more likely
Not just Digital But Tokenized Dollar
Several countries’ central banks are racing to create their own central bank digital currency (CBDC), including China, which said earlier this year their CBDC was “progressing smoothly,” which lead analysts to believe that the currency could arrive sometime this year.
This has invigorated the U.S government to take action and lawmakers have been discussing using a digital dollar to route money through existing payment infrastructure, which would allow them to reach the recipient first hand, and even direct them on ways of spending it if they so wish.
However, the Digital Dollar Project, which is backed by former CFTC chair Christopher Giancarlo, isn’t the same concept as what was proposed in previous drafts of the bill.
The Digital Dollar Project, which is a partnership between Accenture and a foundation formed for the digital dollar, has decided the idea of a digital dollar needs to be extended, so it’s not just a digital dollar, but a tokenized version of the dollar.
This would be completely different from the idea of a digital dollar, which would be controlled by the Federal Reserve, to outlay emergency funds to American citizens, as was proposed in the stimulus plan.
Digital Dollar Project director David Treat said of the difference in ideas: “[The U.S. government’s] use of the term digital dollars is really to convey being able to distribute electronic payments directly to consumers.”
However, he went on to say “Our use of the term is differently focused on a central bank digital currency meaning a third form of money, a tokenized form of legal tender issued by the Federal Reserve that enjoys the full faith and credit of the United States.”
As well as China, Singapore and Canada have also announced CBDC experiments with cross-border payment experiments, and with the U.S. seemingly lagging behind, Washington could even turn to Facebook and start using its consider using its Libra stablecoin, which would mainly be backed by U.S. dollars in a basket of currencies.
It’s all a race for the first CBDC, and in the uncertain times ahead, any government that can issue a CBDC first will benefit hugely from world trade as the thirst for fiat will only increase.
Will it be the U.S.? Who knows, but if it’s China, will anyone be willing to take a punt on the Yen, as nobody knows its true value. My guess is that as long as the U.S. are not too far behind, they won’t lose out too much, but getting, not just a digital dollar, but a tokenized version will benefit the U.S. greatly.