US Secretary of the Treasury Janet Yellen endorsed the idea of establishing a
digital dollar make it safer and faster to transact compared to the current Bitcoin cryptocurrency. « A digital dollar, a central bank digital currency, could help with
faster, safer and cheaper payments« Yellen said in a live debate hosted by the newspaper’s Dealbook
The New York Times.
Yellen pointed out that
Bitcoin is widely used as a transaction mechanism and it is often used to carry out illicit financial movements.
« It is an extremely inefficient way to conduct transactions and the amount of energy that goes into processing transactions is staggering, » Yellen said.
hit all-time highs above $ 58,000 over the weekend, skyrocketing from less than $ 11,000 in late September. At its peak, its market capitalization surpassed a trillion dollars, matching tech giants like Amazon, Google and Microsoft as speculators and even donations from top universities like Harvard and Yale bought the 12-year-old digital currency.
As Yellen spoke, the price of Bitcoin fell 11 percent since his record for the weekend. Yellen specifically referred to this price instability, while discussing lThe least desirable traits of Bitcoin.
« It is a highly speculative asset and I think people should be aware that it is extremely volatile, I am concerned about the potential losses investors could suffer, « he said. However, Yellen acknowledged that even a digital currency issued by the Federal Reserve System (FED, for its acronym in English) or other central banks would have problems.
« There are a number of issues around the central bank’s digital currencies that need to be examined, » he said. In that sense, he asked himself « what would be the impact on the banking system? Would it cause a large movement of deposits away from banks and towards the FED? Will the Fed have to deal with retail customers or try to do so at the wholesale level, given your concern about financial stability? How would we handle money laundering and illicit financial issues to protect the consumer? All told, it’s worth looking into. «
The Bank for International Settlements and seven central banks released a report in October that sets out some key requirements for central bank digital currencies (CBDCs).
They recommended that CBDCs complement, but they do not replace cash and other forms of legal tender and that they do not harm monetary and financial stability.