For the longest time, money has been physical — think rai stones, shells, or the physical and dirty bills we have used for centuries. But, with the introduction of credit into the global economy through credit cards along with digital payment systems like PayPal, Revolut and Venmo, money has started to transition into a digital form, at least in the Western world.
The thing is, this digital money is far from efficient: you can’t transact it at will as you would physical bills and fees can quickly rack up due to the multiple digital payment ecosystems.
It should come as no surprise, then, that innovators have been in search of new solutions that will iron out the current kinks in the global payment system.
One such solution, as proposed by former chairman of the Commodity Futures Exchange Commission (CFTC), Christopher Giancarlo, would be to turn the dollar entirely digital.
Ex-CFTC Chief Wants a Digital Dollar
According to a report from the Wall Street Journal published on January 16th, Giancarlo, a former financial regulator dubbed “Crypto Dad” due to his seeming liking of Bitcoin and other digital assets, has just created a new organization to promote the development of a digital U.S. dollar: the nonprofit Digital Dollar Foundation.
This new organization, the report claims, is effectively a think-tank that will focus on developments around turning the dollar into a digital currency or asset based on blockchain or a blockchain-like technology.
The Digital Dollar Foundation will also look into the benefits of bringing the dollar digital (and presumably the drawbacks, too).
While this may sound adventurous, there are other bona fide individuals and companies joining in on Giancarlo’s ambitious plan. Another former CFTC official, Daniel Gorfine, a private equity company, and information technology giant Accenture are all supporting the project.
As to why a digital dollar is needed, Giancarlo said to the WSJ in an interview:
Like with the physical infrastructure of this country, if you don’t modernize and keep up with the times, those strengths will begin to fray.
He continued this in a press release shared to some other media, writing that this project is needed to “catalyze a digital, tokenized U.S. currency that would coexist with other Federal Reserve liabilities and serve as a settlement medium to meet the demands of the new digital world and a cheaper, faster and more inclusive global financial system.”
Funnily enough, Giancarlo isn’t the only one in the upper echelons of American politics to have thrown their weight behind a digital dollar project.
Per previous reports from Blockonomi, lawmakers U.S. Representative Bill Foster (D-Illinois) and U.S. Rep. French Hill (R-Arkansas) in October sent a letter to the chairman of the Federal Reserve about digital money. In it, they wrote:
With the potential for digital currencies to further take on the characteristics and utility of paper money, it may become increasingly imperative that the Federal Reserve take up the project of developing a U.S. dollar digital currency.
They added that should the U.S. drop the ball in this field, the unparalleled primacy of the USD in the global economy could begin to falter.
Others Will Beat U.S. To the Crypto Punch
While Giancarlo and a few others with influence are all for the digital dollar, the Federal Reserve and others in power in the U.S. don’t want to budge.
In December, following the aforementioned letter from the lawmakers and similar requests from others, the Secretary of the Treasury Steven Mnuchin said that there is no way that the monetary leaders in the U.S. will think of issuing a blockchain-backed dollar in the near term:
Powell and I have discussed this at length: we both agree that in the near future, in the next five years, we see no need for the Fed to issue a digital currency.
So for now, it seems China will be the first one to launch a national crypto-asset project.
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