On March 9, the Biden administration released an executive order (EO) instructing a long list of federal agencies to study digital assets and to propose numerous reports about their use and proposals to regulate them. Much of the executive order is focused on cryptocurrencies such as bitcoin and ethereum, which run on blockchain technology and have become increasingly popular among many investors and consumers in recent years.
But there is an even more important part of the EO: President Biden has instructed the federal government and Federal Reserve to lay the groundwork for a potential new U.S. currency, a digital dollar.
If the United States were to adopt a digital currency like the one discussed in Biden’s executive order, it would be one of the most dramatic expansions of federal power ever made, one that could put individuals and businesses in grave danger of losing their social and economic freedoms.
Among other important actions, the White House executive order directs several federal agencies, including the Treasury Department, to study the development of a new central bank digital currency (CBDC) and to produce a report within 180 days of the EO discussing the potential risks and benefits of a digital dollar.
The order further directs the Treasury Department, Office of the Attorney General and Federal Reserve to work together to produce a “legislative proposal” to create a digital currency within 210 days, about seven months.
A digital dollar would not merely be a digital version of the existing U.S. dollar, but rather an entirely new currency that would, at least at first, exist alongside today’s currency. Similar to cash, the CBDC would be used to pay for goods and services and would likely be managed by the Federal Reserve, the central bank of the United States.
Unlike the current dollar, though, a central bank digital currency would not exist in physical form, meaning you wouldn’t be able to go to a bank or ATM and withdraw it.