There are digital currencies that bear the image of Fonzie from Happy Days, Vladimir Putin, H.P. Lovecraft’s fictional Cthulhu monster, and of course the famous shiba inu dog from the Doge meme. Now George Washington could be joining that illustrious crew.
It emerged Monday that the Federal Reserve plans to launch a review of whether the U.S. should develop a digital currency this week — nudging it in the direction of other central banks that are already e-minting.
Tales From the Cryptocurrencies
A Federal digital dollar would be different from private cryptocurrencies like bitcoin and ethereum, because it would be issued by and backed by the U.S. central bank, just like paper bills and coins.
Those who like the idea say a digital dollar would revolutionize how government and financial institutions could transfer money efficiently. But the Philadelphia Fed warned in June that it could throw the entire financial system into crisis: people might pull their cash out of stocks, banks, mutual funds, and investments in order to opt for the Fed’s super-stable currency.
Officials at the Fed are split — and the review will reflect that, launching with a paper that will likely take no stance. But plenty of other countries don’t share this agnostic approach:
- About 60% of the world’s central banks are working on proof-of-concepts for digital currencies, according to a survey by the Bank for International Settlements.
- China is among the 14% of central banks that have launched a digital currency pilot program. Five Caribbean countries have already started officially issuing e-currencies.
A Touch Sensitive: “It’s more important to do this right than to do it fast,” said Fed Chair Jerome Powell, who has pushed back against suggestions the U.S. is lagging behind. But even if the Fed continues to move at a glacial pace, the private sector is clearly keen on digital dough, whether it features Washington or Fonzie on the logo: companies mentioning digital currencies on earnings calls spiked from 17 in all of 2020 to around 147 in the latest quarter, one expert told Bloomberg.