What Would Be The Impact Of A USA Crypto’??|Biden team moves for digital sawbuck

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US American President Joe Biden has ordered the federal government to look into creating a digital currency, which has the potential to change how money is transferred and utilized throughout the world.

Before his decision is the virtual greenback, there will be a myriad of significant impacts as well as risksto take into consideration first.

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It would still be an American dollar issued by the US Federal Reserve central bank, like all US coins and bills used at present, but it is in a digital form which is accessible to all, not just financial institutions.

As opposed to money that has been deposited in a bank account or spent through apps such as Venmo as well as Apple Pay, it would be registered in the accounts at the Federal Reserve, not a bank.

Additionally, the digital dollar would have the same value as the paper currency, a divergence from cryptocurrencies which currently are highly volatile in their valuation.

The most important questions are still unanswered for instance, whether a digital dollar would be based on blockchain technology like bitcoin or if it could be associated with a payment card.

Biden is requesting agencies, including the Treasury Department, to examine various issues on the topic.

If the government chooses to proceed and implement a digital dollar, it could take "a number of years" before we are able to use a digital dollar -- authorities will need to consider whether they can use the technology that they employ, according to Darrell Duffie, a digital currencies researcher working at Stanford University in California.

It will reduce or remove transaction costs since exchanges will no longer be made through banks or bank cards, nor apps that take commissions on every transaction.

They say it could help those who do not have bank accounts roughly five percent of household in the United States, and could make it easier for the government to pay for benefits.

There are risks associated with a security breach or a system failure Also, there are concerns about privacy as the government could theoretically gain access to every transaction.

The banking system might also be affected as banks make use of customer deposits to lend to others, and using a digital dollar, they'd likely have less funds to draw from.

A US 'digital dollar' could have far reaching consequences on the world financial system Photo: AFP / Asif HASSAN

International transfersare usually slow and expensive to make, could be greatly eased.

A process that requires two days to be valid could be completed in a matter of hours, according to Marc Chandler, a foreign exchange expert working for broker Bannockburn.

For Chandler his geopolitical responsibilities, the role played by the US dollar is not altered by its digital launch.

A digital dollar could be "a natural evolution rather than a revolution" the analyst pointed out, noting that more than $6.5 trillion have already been exchanged electronically every day on the market for foreign exchange.

Even the event that China launches a large-scale digital yuan, as is being discussed, he said he isn't convinced that it would change China's status in the global economy since "there will always be questions of trust, transparency, depth of markets."

For Stanford's Duffie However, if the United States wants to continue in gaining from the dollar's status of being the most used currency in central bank reserves and international payments, it's important that the government proceed carefully.

"The US are going to need to ensure that they stay in a leading position in international forums that discuss standards for making cross-border payments standards for digital currencies," he said.

Other countries are working on digital versions of their own currencies, starting from eurozone to India However "there is no evidence to suggest being first to market provides any significant or material advantages," said Jamiel Sheikh, founder of CBDC Think Tank.

However, the failure of an institution due to unintended effects, low usage or other factors can undermine trust in the issuing institution He also noted.

"The overwhelming dominance of the dollar gives the US the luxury of learning from... other countries," agreed Cornell University professor Eswar Prasad.

If well-designed the digital dollar can be more preferable for use at home as opposed to cryptocurrencies, said Duffie.

To transfer money internationally, however the official said that he was "skeptical that large central banks like the Fed or the ECB, China or Japan, will give accounts at the central bank to people all over the world."

In the event that United States did what Google did to me so, as he said, it could destroy the system of monetary exchange in smaller countries where people may prefer using the digital dollar rather than the local currency.