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 people without bank accounts, about five percent of households in the United States, and could make it easier for the government to pay benefits.
There are risks like a system failure or a cyberattack, and there are also questions about privacy, as the government could theoretically have access to all transactions.
The banking system could also be undermined as banks currently use customers' deposits to lend to others, and with a digital dollar they could have less money at their disposal.
- How will global finance be affected? -
International transfers, often slow and expensive to make, could be greatly eased.
An operation that currently takes two days to be validated could be done in one hour, said Marc Chandler, a foreign exchange expert for the broker Bannockburn.
For Chandler, the geopolitical role of the US dollar would not be upset by the digital version's introduction.
A digital dollar would represent "a natural evolution rather than a revolution", he noted, recalling that more than $6.5 trillion are already exchanged in electronic form every day on the foreign exchange market.
Even if China launches a large-scale digital yuan, as is being discussed, he said he doesn't think that changes China's role in the world economy as "there will always be questions of trust, transparency, depth of markets."
For Stanford's Duffie, however, if the United States wants to continue to benefit from the dollar's status as the dominant currency in central bank reserves and international payments, it is essential that the government tread cautiously.
"The US are going to need to ensure that they stay in a leading position in international forums that discuss standards for making cross-border payments standards for digital currencies," he said.
- Can the United States catch up? -
Other countries are already working on digital versions of their own currencies, from the eurozone to India, but "there is no evidence to suggest being first to market provides any significant or material advantages," said Jamiel Sheikh, founder of CBDC Think Tank.
On the contrary, failure due to unintended consequences, low usage or other issues can undermine faith in the issuing institution, he noted.
"The overwhelming dominance of the dollar gives the US the luxury of learning from... other countries," agreed Cornell University professor Eswar Prasad.
- Would the crypto world be turned upside down? -
If properly designed, a digital dollar could be more preferable for domestic use than a cryptocurrency, said Duffie.
For international transfers, however, he said he was "skeptical that large central banks like the Fed or the ECB, China or Japan, will give accounts at the central bank to people all over the world."
If the United States did so, he noted, it could wreck the monetary system of small countries whose people might prefer to use the digital dollar rather than the local currency.
ETX Studio
Fri Mar 11 2022
US President Joe Biden (R) meets with business leaders to discuss the Bipartisan Innovation Act. - ETX Studio
[TERKINI] 9 termasuk 4 isteri ahli lembaga GISB dilanjut reman
Sembilan termasuk empat isteri Ahli Lembaga GISB Holding Sdn Bhd dilanjutkan reman antara satu dan dua hari.
Akta 852: KKM yakin kadar merokok menurun kepada kurang 15 peratus tahun hadapan
Kementerian Kesihatan yakin prevalens kebangsaan merokok mampu turun kepada kurang 15 peratus tahun hadapan susulan penguatkuasaan Akta 852.
Juruteknik jatuh di lereng Gunung Machincang bukan pekerja kereta kabel
Panorama Langkawi menjelaskan juruteknik yang terjatuh dari besi penahan platform kaca di lereng Gunung Machincang, bukan pekerja atau kontraktor syarikat itu.
Dakwaan guru paling ramai palsukan MC tidak bertanggungjawab - Fadhlina
Dakwaan mengaitkan guru sebagai penjawat awam paling ramai memalsukan sijil cuti sakit (MC) adalah tidak bertanggungjawab.
Lagi pemimpin Hamas mati dalam serangan Israel
Pemimpin Hamas Tulkram Zahi Yaser Abd al-Razeq Oufi antara 18 orang terbunuh dalam serangan udara Israel di bandar itu yang diduduki di Tebing Barat.
Ribut petir dijangka landa hampir semua negeri petang ini
Ribut petir atau hujan lebat diramal berlaku di hampir semua negeri hingga 4 petang ini, menurut METMalaysia.
Kertas cadangan mengenai anak asuhan GISB dijangka dibentang minggu depan - Nancy
Pembentangan kertas cadangan melibatkan penjagaan dan masa depan kanak-kanak dan remaja yang dikaitkan dengan GISB sepatutnya dibentangkan minggu ini ditangguhkan.
Penyamar pelbagai profesion tipu tawaran kerja juruterbang
Seorang lelaki yang dikatakan pernah menyamar sebagai timbalan pendakwa raya, juruterbang, jurutera Petronas dan pelbagai profesion lain mengaku tidak bersalah di Mahkamah Majistret Ipoh atas tuduhan menipu menyebabkan kerugian RM24,000 antara 2016 hingga 2018.
Selesaikan saman tertunggak untuk mohon Program Khas Peralihan Lesen Memandu
Orang ramai dinasihat menyemak dan menyelesaikan saman tertunggak terlebih dahulu bagi melayakkan menyertai Program Khas Peralihan Lesen Memandu Malaysia.
microLEAP sedia solusi pembiayaan digital patuh syariah buat PMKS tempatan
microLEAP, sebuah platform pembiayaan Peer-to-Peer (P2P) patuh Syariah dan konvensional, muncul sebagai penyelesaian alternatif kepada perusahaan mikro, kecil, dan sederhana (PMKS) di Malaysia.
Angka korban Taufan Helene melebihi 200 di Amerika Syarikat
Sekurang-kurangnya 204 orang disahkan maut di enam negeri akibat Taufan Helene sejak ia melanda Florida seminggu lalu.
Biden tegaskan sokongan penuh ke atas Israel
Biden kini dalam rundingan dengan pemimpin tertingginya mengenai tindak balas sesuai dilaksanakan ke atas Tehran.
Biden gesa gencatan senjata di Lubnan
Beberapa pembantu utama mengukuhkan gesaan Biden untuk gencatan senjata dengan menggesa resolusi diplomatik terhadap keganasan.
Konflik Asia Barat: Joe Biden akan segera bercakap dengan Benjamin Netanyahu
Presiden Amerika tegaskan, perang yang semakin meluas di Asia Barat mesti dielakkan.
UNGA 79: “Ucapan terakhir Biden, retorik biasa, kita tidak terlalu berharap” - Mohamad
Menteri Luar sifatkan penampilan terakhir Presiden AS di UNGA sekadar public consumption.
UNGA 79: PBB perlu beradaptasi, mainkan peranan lebih inklusif demi keamanan - Joe Biden
Joe Biden menggesa Pertubuhan Bangsa-Bangsa Bersatu (PBB) memainkan peranannya dengan lebih inklusif dan berkesan dalam menangani isu serta konflik semasa yang melatari dunia hari ini.
Harga telur naik, JD Vance kritik pentadbiran Biden-Harris
Calon naib presiden parti Republikan, JD Vance, mengkritik pengendalian ekonomi di bawah pentadbiran Biden-Harris dalam lawatan ke sebuah kedai runcit di Pennsylvania bersama anak-anaknya pada Sabtu.
Biden lega Trump tidak cedera selepas cubaan bunuh
Presiden Amerika Joe Biden lahirkan rasa lega kerana bekas presiden Donald Trump tidak cedera berikutan cubaan membunuh.
Trump akui 'tersinggung' dengan sokongan Putin terhadap Harris
Donald Trump mengakui bahawa beliau "sangat tersinggung" dengan keputusan Vladimir Putin menyatakan sokongan kepada Kamala Harris.
Hunter Biden mengaku salah atas pertuduhan elak cukai
Anak lelaki Presiden Amerika Syarikat Joe Biden, Hunter Biden mengaku bersalah pada Khamis terhadap sembilan pertuduhan dalam kes cukai.