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Former CFTC Chair Giancarlo Says Fed Should Create a Digital Dollar

Christopher Giancarlo, the former chairman of the Commodity Futures Trading Commission (CFTC) believes it’s time for the Federal Reserve to issue a fully digital currency on Feb. 21.

Giancarlo told the Yahoo Finance’s On the Move program that the Federal Reserve must issue a digital currency in order to compete with China’s central bank digital currency (CBDC). 

The former CFTC chairman highlighted that online shopping would benefit from the U.S. offering a digital payment option as there won’t be any intermediary fees involved like with the traditional debit and credit cards. Giancarlo also added: 

“When we talk about a digital dollar we’re talking about in the virtual world, to have that same immediacy of payment that we have in the analog human world.” 

Giancarlo believed that a digital dollar is agnostic to other initiatives in the cryptocurrency space. He said that Bitcoin and innovations like Facebook’s Libra have their own “value propositions” and could co-exist with a central bank issued digital currency (CBDC). He expressed that: 

“I think the market is always better when there is a lot of competition out there… An instrument like Bitcoin may serve to the equivalent to the digital dollar might be equivalent to the digital gold.”

Giancarlo has also advocated that the U.S. regulatory framework needs updates to adapt to the changes that cryptocurrencies bring to the financial institutions. He says: 

“It’s going to change things dramatically and our laws need to evolve with that as they’ve done over the 90 years, now they need to evolve again.”

Giancarlo is involved with a Digital Dollar project that is supported by a global consulting giant Accenture, which is allegedly collaborating with Sweden’s central bank on its own digital currency known as the e-krona. This project was initially started by Giancarlo with the goal of establishing a non-profit foundation to study prospects for converting the dollar into a “fully electronic currency based on blockchain.”

It was reported that the U.S. Congressman Bill Foster (D-IL) has questioned the Chair of the Federal Reserve Jerome H. Powell on U.S’s CBDC progress at a hearing on monetary policy. 

He specifically cited China’s plan to implement the digital Yuan among countries involved in its Belt and Road initiative and thatit could jeopardize the dollar’s world reserve currency status.

With finance ministers and central bank governors having recently discussed cryptocurrency regulations at the G-20 summit, Japan is taking notice at home. Leaders at the Bank of Japan (BOJ), Ministry of Finance (MOF), and Financial Services Agency (FSA) have held a number of meetings to determine whether the country should become next in line to adopt a government-sanctioned digital currency.

The issues under discussion include how the Japanese government embracing a central bank digital currency (CBDC) would impact the world economy. Despite the rise of numerous crypto exchanges, the U.S. dollar continues to be the de facto global currency.

As the birthplace of cryptocurrency, Japan has often been ahead of the global pack when it comes to utilizing blockchain technology. Its economy might well benefit most from adopting a digital currency. However, like other countries, it is facing the same concerns over hacking, financial crimes, and money laundering as such currencies become more widespread.

The latest meeting to address such issues was held in January. Among those in attendance were Ryozo Himino, FSA vice minister for international affairs, Yoshiki Takeuchi, vice minister of finance for international affairs, and Shinichi Uchida, BOJ executive director for international affairs.

The BOJ in particular plans to be prepared for issues related to Japan adopting a digital currency. Governor Haruhiko Kuroda previously stated there was no demand for a state-sanctioned digital currency in Japan, but still recognized one could arise once the regulatory challenges and risks were properly addressed:

“We are advancing research and study from the technical and legal perspectives so that we will be able to move in an appropriate way when there is a growing need.”

Developments abroad may be fueling these discussions in Japan. The People’s Bank of China began a two-year pilot program to assess digital yuan transactions. Beijing has made it clear any digital currency in China would complement the yuan, not replace it.

The Bank of England, the European Central Bank, and central banks in Sweden, Canada, and Switzerland have announced they would conduct a joint study on digital currencies with the Bank for International Settlements. Meanwhile, the U.S. Internal Revenue Service is preparing to hold a cryptocurrency summit in March.

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