The Biden administration has revealed their plans for CBDC in the United States:
- President Biden’s Executive Order Calls for ‘Highest Urgency’ on CBDC Research and Development: https://www.coindesk.com/policy/2022/03/10/bidens-executive-order-calls-for-highest-urgency-on-cbdc-research-and-development/
- NBC: https://www.nbcnews.com/tech/crypto/us-government-digital-currency-rcna19248
- Yellen slips a few words: https://cointelegraph.com/news/janet-yellen-let-slip-details-of-biden-s-executive-order-on-crypto
Here is an excerpt:
"(d) The attorney general, in consultation with the Secretary of the Treasury and the chairman of the Federal Reserve, shall: (i) within 180 days of the date of this order, provide to the president through the APNSA and APEP an assessment of whether legislative changes would be necessary to issue a United States CBDC, should it be deemed appropriate and in the national interest; and (ii) within 210 days of the date of this order, provide to the president through the APNSA and the APEP a corresponding legislative proposal, based on consideration of the report submitted by the Secretary of the Treasury under section 4(b) of this order and any materials developed by the chairman of the Federal Reserve consistent with section 4 (c) of this order."
(Read the complete Executive Order here: www.coindesk.com/policy/2022/03/09/heres-the-full-text-of-bidens-executive-order-on-cryptocurrency)
-- This move has been foreshadowed over the years as Bitcoin gained popularity and usage among many nations. Currently, according to the US report, 100 nations are exploring CBDCs.
What is CBDC?
A CBDC is a centralized form of digital currency that is partially modeled on cryptocurrency like Bitcoin -- except that it's centralized. CBDC means private code instead of open source as with true decentralized crypto. This means some of the code or all of the code that operates CBDC is a 'black box'.
Additionally, CBDC carries the risk that the private nodes utilized to support the network can be used to manipulate transaction blocks. Overall, CBDC is criticized for its similarity to legacy finance: central banks act as middlemen for transactions and the Federal reserve controls the supply of currency, while the government retains the ability to freeze users' funds for arbitrary reasons.
CBDC, in a nutshell, gives power back to the powerful and away from the users who wish to exchange value and information.
Serious Moves by US Govt
The previous whitepaper published suggested a discovery approach. But with this Executive Order, the US government indicates a very serious interest in centralized cryptocurrency.
Indicated: an order for the creation of a complete framework for currency control, an order for an implementation framework and further in-depth study and action directives toward a total adoption of a new digital currency and all that this entails.
What's next for the US dollar, though?
Yellen says that inflation is here to stay, especially due to the Ukraine war.
-- At the current rate of US dollar inflation, we may see astounding prices at the gas pumps. Food, housing and other prices can be expected to go to the limit. We may see candy bars, cigarettes, coffee and alcohol all skyrocket as the US cash dollar is further inflated into oblivion.
With this EO, the US dollar has seen better days, and very likely to see its darkest days very soon.
Here are a few questions that might arise for US consumers about the next currency:
- Will I be required to convert my checking account to USD-CBDC? Or can I keep my USD - cash or debit ledgers?
- Will I be required to open a specialized account? What will the requirements on it be?
- Will my transactions be snooped on?
- Will my account be directly tied to my License or ID card or free of KYC as with real crypto?
- What biometric information will be tied to my CBDC address?
- Can I get more than one CBDC address?
- Will vaccination status be connected to the USD-CBDC?
- Will certain groups or classes of people be barred from the CDBC, for example, those with poor credit scores?
- Will the code be private? Or open source?
- Will US cash be burned / recycled as mobile payment is adopted for the new currency? Where will it be returned or exchanged, if there will be an exchange?
- Will there be a supply cap that is unchangeable?
- Who will be the minter of new CBDC, the Federal Reserve's accounts? Or a new government agency/body?
- Will other crypto be banned in the US to reduce competition?
- Will there be restrictions on real crypto as a result of the CBDC (for example, how China restricted crypto but allows its CBDC)?
Will I lose control of my assets with US-CBDC?
The detailed paper suggests National Security will be a key concern with regard to the CBDC. So it is not a stretch to presume a freeze or seize funds function of some sort.
We'll be looking forward to news about the CBDC in the coming months.
What do you think will happen with the US dollar now? Will it live side by side with the new