10 reasons why US should plan for a digital currency

Private digital currencies like Bitcoin and Ethereum are already being used for payments of goods and services in many countries. But a virtual format of the fiat currency, or central bank-backed digital currency (CBDC), is seriously being pondered in many countries today, including the US.

The aim is to provide people with the option to have currencies digitally, given their growing popularity of late. Globally, 86 percent of the countries plan to launch their digital currencies. Of which, 14 percent already have readied their pilots, while 60 percent is in the conceptual stage, according to Cointelegraph.com survey.

Why should US plan for a digital currency?

Hence, the US also has launched its own study following this global trend. The Federal Reserve is currently studying the pros and cons of a CBDC, but a final decision on whether to greenlight such a move is still awaited.

Also read: Why is Axion crypto grabbing limelight today?

Here we explore why the US needs to prepare itself for a digital currency.

1. The US dollar is the global reserve currency, and it has held that position for decades. But if other countries launch CBDCs before the US does, they will be able to transact with each other without the US dollar. And if that happens, the US dollar will lose its status as a global reserve currency.
   
   
2. The dollar is an integral part of US foreign policy. And it bars other countries from a dollar-based system. But if other countries launch CBDCs before the US does, the US will not be able to monitor other countries' transactions.   
   
   
3. Currently, the US banks have not invested significantly in payments But digital currency offers an opportunity to enhance their existing payments system.
4. The governments, including the US, will be able to monitor when, how, and what items citizens are buying. For instance, they will be able to monitor transactions efficiently for banned items or substances. Besides, they can program CBDCs so that people cannot buy illicit drugs or weapons but only buy essential and genuine items.
   
   
5. China has already decided to launch its digital currency ahead of the US. Besides, it has narrowed the gap with US in many sectors like auto and technology. China might surpass the US as the world leader if the latter does not launch its digital currency.

Source: Pixabay.