The newly established Digital Dollar Project, announced on Monday, May 3, will run five CBDC trial programs over the next 12 months. The initiative’s goal is to collect data that will help officials in the United States figure out how to build a domestic digital currency.
The Digital Dollar Project will begin three pilot initiatives to collect data on the digital dollars functional, sociological, and economic benefits in the following two months.
What are the authorities saying?
As per Al Jazeera, Christopher Giancarlo, former head of the Commodity Futures Trading Commission & co-founder of the Digital Dollar Foundation, noted the lack of data on CBDC in the United States:
“Conferences and papers are coming out every week worldwide on CBDCs based on data from other countries. What there is not, is any real data and testing from the United States to inform that debate. We’re seeking to generate that real-world data”
Giancarlo further stated that the US should lead in digital currency as well:
“It’s vital that the US asserts leadership as it has in previous technological innovations.”
According to the report, the Fed is taking a cautious approach as the protector of the world’s leading reserve currency. Chairman Jerome Powell states that making the right digital dollar is more vital than just implementing a fast dollar.
Powell was right to be cautious, but Giancarlo cautioned that the US could slip further behind as China moves forward with its own CBDC implementation and testing.
While the Federal Reserve in the United States has been researching the technology and uses for a CBDC, the country lags behind the digital currency initiatives that are now underway in several other countries.
China’s central bank and other major state banks plan to test the virtual yuan ahead of a May 5 retail shopping festival.
Accenture is not new to CBDC.
Accenture has worked on CBDC initiatives in other nations, including Canada, Singapore, France, and Sweden, where the first phase of the pilot has already been completed.
CBDCs will coexist with existing forms of physical and electronic money rather than replacing them, according to David Treat, a senior MD at Accenture.
“It’s not a one-size-fits-all solution for all money,”
Treat said.
“We will be utilizing physical currency and coins for a while.”
According to a Bank for International Settlements report, 80 percent of the world’s central banks are already exploring digital currencies.
CBDCs are digital equivalents of banknotes and coins, allowing holders to make fast electronic payments and have a direct digital claim on the central bank.
While debit cards and payment apps are examples of digital cash, those transactions are made by commercial banks using funds credited to their accounts by central banks. The government does not fully back them, can take days to settle, and frequently incur costs.
On the other hand, Cryptocurrencies are not controlled by a central entity but by private individuals. They are decentralized, and the transaction time & costs are less than their fiat counterparts.
