The US Treasury Department’s Evaluation of a Potential Digital Dollar

In a recent speech for the Atlantic Council, Nellie Liang, the U.S. Treasury Department’s undersecretary for domestic finance, stated that leaders from various agencies and White House offices will begin meetings in the “coming months” to discuss the potential for a digital dollar. While no decision has been made, Liang suggested that the U.S. government is actively evaluating whether a central bank digital currency (CBDC) is in the national interest.

Liang highlighted the potential benefits of a digital dollar, including the preservation of the dollar’s global role and the reduction of frictions in cross-border transactions. She also suggested that CBDCs could become a key element for stablecoin use in the industry, potentially making it easier to transfer value among stablecoins.

However, Liang also mentioned some of the potential risks associated with a digital dollar, such as the vulnerability of a retail version to destabilizing runs. Despite this, the Treasury Department is leading a government working group that aims to answer policy questions, and the Federal Reserve is separately working on figuring out the potential structure and use for the digital dollar in case it receives approval from the White House and Congress to go ahead.

It’s worth noting that Daleep Singh, a recent top economic adviser for President Joe Biden, told U.S. senators that an executive order issued last year was intended to push for the launch of a CBDC. However, at least one Federal Reserve Board governor, Christopher Waller, is openly opposed to the idea. The Treasury Department under Liang’s leadership will issue interim public updates on its progress in the evaluation of a digital dollar.

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