What Would Be The Impact Of A US "Digital Dollar"?
US president Joe Biden has ordered the federal government to look into creating a digital dollar
US president Joe Biden has ordered the federal government to look into creating a digital dollar, a move with the potential to reshape how money is moved and used around the world.
Before his order results in a virtual greenback, there will be numerous major impacts -- and risks -- to consider first.
Here are some key questions:
What form would a digital dollar take?
It would still be a dollar issued by the US Federal Reserve central bank, like all US bills and coins used now, but in a digital form that is accessible to everyone, not just financial institutions.
Unlike money deposited in a bank account or spent via apps like Venmo and Apple Pay, it would be registered in the accounts of the Federal Reserve, not a bank.
At the same time, the digital dollar would be worth the same as its paper counterpart, a divergence from cryptocurrencies which currently have highly volatile valuations.
Key questions remain unanswered, like whether a digital dollar would be based on blockchain technology like bitcoin or if it would be linked with some sort of payment card.
Biden is asking agencies, including the Treasury Department, to examine various issues on the topic.
If the government decides to go ahead, it could take "a number of years" before we can use a digital dollar -- authorities will have to explore for instance which technology to use, said Darrell Duffie, a digital currencies expert at Stanford University in California.
Why launch a digital dollar?
It would reduce or even eliminate transaction fees since exchanges would no longer go through banks, bank cards or apps that take commissions on every payment.
Proponents say it would help
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