With the growing strength of digital currencies like Bitcoin, governments seem to be taking the idea of State-backed digital currencies quite seriously. China has been at the forefront of this development with the issuance of its digital Yuan. However, the United States doesn’t seem very impressed with the move.
The U.S is concerned that the digital Yuan could be used as a tool for avoiding sanctions. The U.S also believes that the Chinese digital coin could be a threat to the U.S dollar dominance as a global reserve currency. According to the U.S Treasury and the Pentagon, the U.S should invest more in understanding this asset.
However, even as it raises concerns about the Chinese currency, the U.S is skirting around with the idea of launching a digital dollar. While it has not come out forthright about the issue, the Treasury Secretary, Janet Yellen, has hinted that it is something the U.S needs to think about seriously.
Secretary Yellen recently stated that digital currencies are something that central banks should put into consideration. Analysts also believe that the U.S. should speed up plans on a digital dollar, and some of them are in the process of trying to make this happen.
One such person is the former CFTC chairman Christopher Giancarlo, who leads the way on a project to develop a digital version of the dollar. All this points to the direction that currencies are taking, and that’s digitization. Besides China, other countries leading the way towards digitization are France, Australia, and Russia.