More talk of a possible launch of a central bank digital currency (CBDC) was heard at the Davos Conference hosted by The Block this Wednesday. One of the lead speakers at the conference, Former United States Commodity Futures Trading Commission (CFTC) chairman, J. Christopher Giancarlo, revealed more details on his Digital Dollar Project, which is in line with a possible launch of a U.S. based CBDC.
Speaking in Davos, the ex-CFTC chairman offered a detailed view and reasons behind the digital asset project. The project is working towards a tokenized digital asset that will be issued by the Federal Reserve, similar to bank notes and coins issued. Giancarlo said,
“We seek to encourage the next major innovation in the U.S. currency: a tokenized fiat currency issued by the Federal Reserve System. A new digital form of the Dollar that, alongside traditional fiat coins, bank notes and reserves, would enjoy the full faith and credit of the U.S. government as central bank money.”
The Digital Dollar project is a non-profit network launched earlier in the month to develop a government regulated currency which differs from the public cryptocurrencies, with no legal tender.
Giancarlo has a vast experience in the traditional financial market, which he described before as a “slow and expensive” transfer system. The legacy financial institutions have been on their heels to find cheaper, safer and more efficient transfer systems with the Bank of Thailand and Hong Kong National Bank two of the latest to announce plans of a possible digital currency across banks.
Furthermore, Giancarlo called on governments to support private investment in digital currencies in a bid to boost innovation and overall development across the field. The private sector development is “important” to advance adoption and innovation of CBDCs. He further said,
“They are also causing us to take a new and more clear eyed view of money – especially the efficacy of traditional analogue fiat money in the new digital economy.”
While most of the regulators across the world have remained skeptical and unwelcoming to the possibility of national digital currencies, the ex-chairman called on the United States to adopt a digital currency to stay ahead of its time. Speaking in his closing remarks, Giancarlo said,
“The adoption of a digital dollar in the U.S. is seen as critical to a possible orderly recalibration of the dollar’s attractiveness relative to other digital currencies to support stable international monetary conditions.”
In late December, the Bank of Bahamas launched its central bank digital currency dubbed Project Sand Dollar for more efficient financial transfers.